How to strike a balance between student loan repayments and retirement schemes

12 Dec 2018

For anyone who signed up for a student loan and now has to pay it all back, the feeling of stress will be familiar.

With pressing deadlines, incessant student loan providers trying to schedule your next payment and the expectations of employers weighing heavy on your mind, you may find it difficult to focus on the future.

Unfortunately, these burdens are often multiplied when the reality of your retirement plan seeps in.

Struggling to stay afloat with student debt and your retirement plan? Source: Shutterstock

According to a National Institute on Retirement Security (NIRS) report named Millennials and Retirement: Already Falling Short, two-thirds of working millennials in the US aged 21 to 32 have nothing saved for retirement.

With a decline in retirement savings, many workers have given up on thinking about their future financial forecast, pledging their focus towards student loan repayments instead.

Student loan schemes are designed to pull applicants through university, so it’s surprising they’re now holding applicants back from fulfilling their desired retirement path.

If student loan recipients fear their current financial situation, there’s no way they’re going to be worried about money matters of the future!

Is the American dream of a modest retirement after a lifetime of work now is a middle-class nightmare? https://t.co/s0TWIhehph #Retirement #Pension #SocialSecurity @NIRSonline pic.twitter.com/MzEbNphvwx

— National Institute on Retirement Security (@NIRSonline) September 21, 2018

Not everyone has the skills to balance different aspects of life, since organisational skills are often overlooked at university-level.

Student loan companies also have a reputation of panicking recipients with warning emails and blunt phone calls. This increase in pressure means the retirement plan is consistently pushed to the back of student minds.

As the NIRS report explains, there are many factors that have contributed to this generation’s issues with savings; low wages and lack of eligibility to participate in employer retirement plans, to name just two.

What can you do to balance both?

Balancing your student debt repayment with your retirement plans doesn’t sound easy, especially if your suffering wage is low or certain employer retirement plans aren’t allowing you to apply.

But there’s always hope.

Budgeting is one answer to the issue of balance. If you’re not an organised person, you can start simple with a spreadsheet that keeps track of your daily expenses.

By tracking these expenses, you’ll begin to identify gaps in the figures and produce solutions for your overspending habits. Every little helps, so if you start to clamp down on your money flow, you may be able to transfer those savings to your future retirement plan.

Try not to panic since many other people are in the same boat. It’s highly likely that other people are feeling the same way.

One option is to openly discuss your worries with others as they may have a proactive solution or a unique perspective to offer. Alternatively, they may know a few companies that are fair and understanding of student debt and provide a future-proof plan of action.

Challenge your expectations. Retirement isn’t for everyone so before you sign up for a strict plan, make sure that it’s what you really want. Not everyone has to have a fixed financial schedule – it is possible to live day-to-day without a plan in place.

It’s up to you what you balance and how much attention you dedicate to both. It’s not impossible if you remain diligent and dedicated to your future goals.