3 Ways to Pay Off Student Loans and Save for Retirement at the Same Time
The average student carries about $32,000 in student debt, according to a 2019 survey by ValuePenguin. Facing a job market that has been decimated by the COVID-19 pandemic, those dealing with student debt find themselves in a difficult position.
Many have been forced to make compromises to pay off their debt, a survey by Student Loan Hero revealed. It found that it kept 31% of respondents from contributing to their retirement accounts; 28% said it prevented them from investing. Only travel, 44%, and going out with friends, 30%, had a higher or similar percentage.
While it may seem like a necessary trade-off for millennials and Generation Zers until the student debt is paid off, delaying contributions to retirement accounts is costly over the long term. The earlier you start saving, the less you have to save per year to retire comfortably. An analysis by Vanguard Group found that $1 invested at age 25 could grow to $4.80 by the time you're 65, based on a 4% return. It goes down the later you start, with $1 at age 30 growing to $3.95 at 65, and so on.
Source Fool.com
