Millennials: Will Student Debt Really Push Your Retirement Age to 75?

A new study says today's young college graduates will be forced to retire late thanks to student debt.

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Thanks to high levels of student debt, America's young college grads could have very long careers ahead of them – more than a decade longer than their parents.

Well, maybe.

Retirement age for young graduates could be pushed out into the mid-70s, according to a new report from financial website NerdWallet. Depending on their starting salaries, lifetime pay trajectories, and debt levels, today's graduates could end up retiring at 75, compared to the current average retirement age of 61, according to Gallup.

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It's just one study, but it raises an intriguing question – given record levels of student debt, will today's graduates be forced to wait much later for retirement?

It does depend on salary expectations and debt levels, of course, but even in the study's most optimistic scenario, today's younger adults will end up retiring six years later than their parents. According to NerdWallet, today's "normal graduate" who enters the workforce with the median level of debt, $23,300, and the median starting salary, $45,327, will only have the nearly $429,000 she needs to retire at the age of 73. A "well-off" graduate earning $55,000 and with only $10,000 in debt will be able to retire at 67. Meanwhile, for a "struggling" graduate with $40,000 in debt and salary alike, retirement won't come until 75.

"The whole idea was to isolate the impact of debt and starting salaries upon eventual retirement outcomes," says Joseph Egoian, analyst at Nerd Wallet and author of the report.

Of course, it's tough to isolate student debt in the complicated picture of saving for retirement. Student debt will likely play one role in pushing retirement ages out, he says, but it likely won't play the largest role among a plethora of factors.

"There are other variables that are much bigger fish to fry in the equation – specifically, health care costs," says Greg McBride, a senior financial analyst at Bankrate. "As life expectancies get longer, health care costs [are] a far more significant sum than your typical student loan debt."

It's tough to predict exactly where life expectancies will be for today's graduates, but already health care costs bear a hefty price tag for the elderly. An average 65-year-old couple retiring this year would need $220,000 just to cover their medical expenses, Fidelity Investments reported in May.

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In the grand scheme of spending, McBride says a college degree is analogous to the cost of a car. And while the lifetime interest payments on a car may not stack up to those on a college degree, no SUV is going to have the same return as a bachelor's degree. According to a study from Georgetown University, median lifetime earnings for someone with a bachelor's degree are nearly $2.3 million, compared to $1.3 million for people with only a high school diploma.

So for an 18-year-old considering student debt as a hurdle to retirement, not incurring that debt might prove an even larger burden in the long run than getting the degree. Egoian agrees that an education can put a person in a better place financially, but only if they get on a well-paying career path.

"You want to be on a path where your salary will accelerate faster than if you had not gone to college," he says. "If you kind of just plod along and your salary just grows as kind of the normal rate you're going to find yourself in a difficult position later on in life."

That said, student debt can put an outsized dent in a young person's retirement savings simply because of the timing of that debt. Many students who find themselves with a new job and $40,000 in debt at 22 may find themselves tempted to focus on paying down debt before saving. Yet those earliest years of saving can be the most powerful, as money invested earlier has a longer time to grow, says Diane Oakley, executive director of the National Institute on Retirement Security.

That leads some young adults to neglect creating 401(k)s, meaning many are foregoing employer match contributions, she adds – the equivalent of leaving money on the table.