4 Ways to Start Saving for Retirement If You Have Student Loan Debt

Student Loan Consolidation

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The current economic mood across the country is highly optimistic. President Trump’s tax policies and business incentives seem to be spurring on tremendous growth, with job numbers at near historic highs. But, as we reported yesterday, millennials aren’t optimistic at all about the economy. They have good reason not to be, as student loan debt is weighing them down.

While the mood is optimistic, we’ve also seen how quickly things can change. Minutes after Trump proposed steel and aluminum tariffs against China, the stocks dropped over 700 points. Thoughts of an impending trade war with the world’s second-largest economy spooked a lot of investors.

Then, we see that GM is shutting down factories and cutting jobs. These tariffs are hitting the car industry in a major way. This is just one sign of how quickly things can go wrong. There’s talk of another recession coming around the corner. If you have student loan debt, this is scary. You’re already reeling and putting off major life decisions.

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Saving for Retirement is Difficult if You Have Student Loan Debt

Over the past decade, we’ve seen student loan debt hit the $1.53 trillion mark. A lot of it has to do with the number of people who decided to go to college when times got bad. They thought a shiny new degree would help them find better work, but all it did is make their lives worse. Burdened with student loan debt, they struggled.

Still, after coming back from a massive recession that hit this country hard for over a decade, huge market swings are a result of troublesome times. It’s not just economically either. If you have all this debt, even in good times, how can you save? There’s no room for an emergency fund. And what about retirement?

Studies reveal that millennials aren’t saving for their retirement. In fact, they’re not saving any money at all. They can’t. Student loan debt sucks up every extra dollar they have. It can take a decade or longer to pay back those loans. So, how are they able to save money for retirement?

Here are four ways you can stay proactive and protect your retirement no matter the economic climate:

1) Start Creating a Cash Buffer

One of the first things you can do is whip out the calculator and start doing some math. You’ll want to have a good idea of your spending and estimate the amount of fixed income you’ll receive. This can include your social security, pension, and other forms of income.

When you’re retired, your flow of income usually covers about 2/3 of total spending, so for that other 1/3, you should be prepared in case the market goes down. By having a buffer, you can siphon cash until the market rebounds.

2) Create Balance in Your Portfolio

Having student loan debt makes it hard to save money. But your future demands it. You won’t be able to survive your golden years if you don’t. You don’t know what type of ailment you have. Working until 70 just isn’t feasible. You’re going to have to make proper investments to make up the difference.

As the saying goes, do not put all your eggs in one basket! You should mix your investment in a few different areas, like certificates, cash, bonds, and commodities. Certain commodities, like gold, are immune to the stock market and hold their price fairly well. If you have a stash in something else along with stocks, if the market is down, you won’t lose your lunch.

3) Don’t Underestimate Spending

Most people think they’ll spend less money in retirement, so they don’t plan ahead as well as they should. The reality is, the majority of retirees end up spending more money, especially at first. Don’t underestimate how much money you’ll spend in your later years. That also means paying off your student loan debt earlier than anticipated.

You spend more in retirement because you have a lot more time on your hands. When you worked for a living, you didn’t have as much time to spend the money you would’ve otherwise. Retirees are also notorious for spending their days traveling abroad and going on vacations. Don’t cheat yourself out of your golden years.


As much as you might not want to hear it, it’s a good idea to shorten up the bucket list a little bit to stretch your money out longer. And curb some of your spending right now. Put all your effort into paying off your student loan debt as soon as possible.

4) Try Not to Borrow

Adding debt onto debt does no one any favors. You don’t know how the economy will be a year from now. Again, focus on your student loan debt first. If you have to live at home for a few years after college, do it! Then you can put the majority of your income into paying that off. That will also allow you to put some cash into a bank account for a rainy day.

The goal is to decrease your risk and your spending. Diversifying your investment is always the best choice to prevent the unforeseen from happening. Be smart with your spending. Once the loans are paid off, life will be simpler.

Last modified: January 14, 2019