More Americans Are Retiring With Student Debt

Many Americans are dragging student loans with them into retirement. Maybe it’s debt they took out for a child, or maybe it’s their own. Either way, it’s a tough — and increasingly common — position to be in. Baby boomers with student debt held an average loan balance of $40,512 last year, according to data from Experian. While far from ideal, these obligations can be managed through smart budgeting and realistic projections about how long to work and what kind of retirement lifestyle is feasible. Read more about student debt and retirement in today’s edition.

Best wishes,
Elizabeth

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Pre-pandemic, a three-to-six-month cash reserve was what financial advisors recommended for an emergency fund. Long gone are the days of a three-to six-month cash stash. We’ve now seen people out of work for a year. I would love to be able to tell someone to have a year’s worth of cash reserves, but that would be unattainable for most…we’d really be talking about the top 10%. If we can stretch for six to nine months’ cash reserve, that could sustain most people for the majority of the unforeseen circumstances one would experience in life.

COVID-19 has shed light on the importance of retirement savings as well. Once people exhaust their emergency funds, where do they turn? Many are forced to tap their retirement funds. People are having to borrow from their IRAs and 401(k)s to cover their basic living expenses.

I’m not the financial advisor who will tell someone, ‘no matter what, don’t touch your retirement.’ In a situation like this, it’s literally do or die for some people. If you don’t have anything else, what are you going to do?

How has the pandemic highlighted the relationship between health and money?
There’s this cliche out there, that your health is your wealth, and it’s true. But what’s also true is your wealth is important to maintaining your health. When I think about the emotional, physical and mental health of those that have been impacted...I’m no doctor, but I think at the end of this we’ll all have some form of PTSD...everyone has been affected in some way.

What are you most looking forward to when this is all over?
I have two young boys, ages 3 and 5 who are the light of my life. I really have to think, what did we do before this? We enjoyed going to restaurants, playdates just being outdoors…we are people watchers.  We love traveling and are looking forward to doing so again soon!

Fortunately, things are beginning to get better and we are starting to see “the light of day.” People are getting vaccinated, feeling hopeful and going back to work while schools, restaurants and businesses are opening again. The stock market has experienced and is maintaining new highs. We are resilient, we will get through this and be better because of it all.

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