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Student Loan Forgiveness Can Help Boost Retirement Savings

A recent study found that 70% of workers under age 40 say that student loans have significantly or somewhat impacted their ability to save for the future.1

Making student loan payments may hinder them from investing for retirement or saving for a home. With some tailored strategies, this can be a valuable time for Plan Sponsors.

Plan Sponsors Can Encourage Participants to Increase Their Savings

Financial events such as the recent student loan forgiveness can prompt employees to look at their whole financial picture. Even if retirement wasn’t a priority before this announcement, employees may now be interested in enrolling in their company’s retirement plan or increasing their contribution rates as a result.

Here a few ways Plan Sponsors can encourage participants to save more:

  1. Personalized messaging – Provide tailored messages to specific segments of the participant population that resonate with where participants are in their retirement journeys.
  2. Financial wellness programs – Offer participants holistic financial advice on how to best allocate additional funds for retirement in an easy-to-understand and personalized format.
  3. Consolidate accounts – Provide information to participants about the potential benefits of consolidating their qualified retirement accounts from previous employers into one retirement account. Most employees will hold multiple jobs over the course of their working years. In fact, between the ages of 18 to 54, individuals held an average of 12.4 jobs.2 Fewer retirement accounts may make it easier for participants to manage their money and create a cohesive investment strategy. Seeing a larger balance from the combined accounts may also motivate a participant to save more.

Saving for retirement is an important component to a participant’s overall financial wellness. The additional income that has been freed up by the student loan forgiveness may promote positive retirement saving behaviors.

For tips on saving for retirement, contact Sentinel Group.

1. Alight Solutions 2021 Employee Wellbeing Mindset Study

2. Bureau of Labor Statistics

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