By: David I Gensler, MSPA, MAAA, EA
Everyone assumes (at least I did) the following about Millennials:
- That they are being crushed by student debt, and as a result;
- It restricts their ability to save for retirement through their company’s’ 401(k) plan.
Well, you know that old bromide about assumptions… So what impact does the student loan debt carried by Millennials actually have? As it turns out, not much according to a white paper called “How Does Student Debt Affect Early-Career Retirement Savings?” by researchers Matthew S. Rutledge, Geoffrey T. Sanzenbacher and Francis M. Vitagliano.
What these researchers found is that the relationship between student debt and participating in their employer’s retirement plan is “small and statically insignificant.” Even more surprising was that the authors found that contrary to all expectations, individuals with large loan balances were likely to accept participating in their employer’s retirement plan, if one was offered.