Millennials aren't the only ones making student loan payments.
It’s not exactly news by now that U.S. students’ $1.3 trillion in debt — which has been growing by $2,726 every second, according to the “student debt clock” on financial site MarketWatch — is a big problem. It’s been blamed for everything from a sluggish housing recovery to a slowdown in Millennials’ demand for cars.
Now, college borrowing seems to be having one more side effect: Altering Baby Boomers’ retirement prospects. Almost one in three employees (32%) have spent money earmarked for retirement on student loans, and 57% predict they’ll do so in the future.
It’s not hard to understand why. The survey, which covered 1,600 employees of all ages nationwide, leaves little doubt that many Millennials are struggling financially. About 42% are paying off student loans, and they’re often digging themselves deeper into debt at the same time. Consider: 53% told PwC they carry credit card balances, and about one-third (30%) also use credit — including costly payday loans — to cover day-to-day living expenses because, despite working full time, they can’t afford the basic necessities otherwise. No wonder PwC found that more than half of Millennials say they’re stressed out about money.
In many cases, Mom and Dad come to the rescue, helping out with student loan payments — even if they have to put off saving for retirement, or tap the savings they’ve already accumulated, to do it. At the same time, the percentage of Boomers who are supporting one or more aging parents has climbed from 16% to 22% since last year.
Boomers’ biggest concern about retirement, the survey found, is running out of money, followed by worries about the future cost of health care. Yet, among the employees in all age groups that the PwC report describes as “impacted by student loans,” more than one in three (34%) say they are currently putting nothing aside for retirement at all.