If you’re in your 20s and not already saving for retirement, you better start now. A NerdWallet study says things aren’t looking so good for college graduates these days. In fact, the retirement age for millennials may be boosted to 75.
“Rising rents and increasing student loan debt have pushed the retirement age to 75 for college graduates,” according to the study. “That’s an increase from NerdWallet’s last analysis, which used 2012 data and predicted an average retirement age of 73 for the Class of 2013.”
“The student loan crisis is not only affecting new graduates’ immediate financial situation, it’s making their retirement prospects dwindle,” Kyle Ramsay, an investing manager at NerdWallet, said in a statement. “Based on our findings, higher loan payments have the potential to reduce nest eggs by 32%. That’s nearly $700,000 in this scenario.”
In addition, rent costs are up 11% since 2012, which places another burden on millennials looking to save.
“Graduates are being forced to shell out more money,” Ramsay added. “This puts them in a tough position because not only are they unable to save early, but they’re losing out on earning interest on those savings.”
The study has some advice for those looking to retire before 75:
- 23-year-olds who begin saving 10% of their income now can shave five years off their retirement age to leave work at 70.
- If a 23-year-old can save 15%, it will pay off with a 10-year difference, bringing one’s retirement age down to 65.
- Someone who saves 20% or more could retire as early as age 62, which is today’s average retirement age.