Is Piling Debt Holding You Back From Saving More For Retirement? It Is For Many Americans | Global News Avenue

Balancing multiple financial priorities can be difficult, a recent survey shows, when people try to repay debtthey may be stingy save for retirement.

Allianz’s 2024 Annual Retirement Survey found that about 46% of respondents who want to save more for retirement said non-housing debt such as car loans, credit cards and student loans are preventing them from saving more. Millennials (56%) are most likely to struggle to save for retirement due to non-housing-related debt compared to Generation X (50%) or Baby Boomers (35%).

It’s not just non-housing debt that affects people’s ability to save for retirement. Of those surveyed who want to save more for retirement, more than a third (34%) cited their housing debt (Allianz refers to housing debt as mortgage or rent) hampering their retirement savings.

“Limiting retirement savings due to debt can make it easy to exceed your savings in retirement,” said Kelly LaVigne, vice president of consumer insights at Allianz Life.

Should you save for retirement or pay off debt?

More than 60% of respondents said they have so many financial goals to balance that it’s difficult to determine which goals to prioritize.

For those struggling to pay off debt, experts often recommend prioritizing making profits for the company 401(k) Contest (if they offer it) and then use the extra savings to pay off debt, especially high interest debt, e.g. credit card.

“The employer match means you’ll get a 100% guaranteed return on your investment immediately,” says Clark Randall, director of financial planning at Creekmur Wealth Advisors. “Once you get your employer match, it’s best to focus on paying down your debt because interest rates on consumer debt are very high. high.”

Additionally, recent legislative changes aim to make it easier for people to resolve various financial issues. Security 2.0a federal retirement law that allows workers to use their matching retirement account contributions Pay off student loans Instead of funding their 401(k) plans. But this is not yet widely available. With this option, workers would miss out on the opportunity to increase their retirement savings, but they could pay off debt faster.