Why Retiring at 75 May Become the New Norm

Better Investing

What's Hot


How to Cut the Cable TV Cord in 2017Family

8 Major Freebies and Discounts You Get With Amazon PrimeSave

8 Creative Ways to Clear ClutterAround The House

Study: People Who Curse Are More HonestFamily

This Free Software Brings Old Laptops Back to LifeMore

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

The 3 Golden Rules of Lending to Friends and FamilyBorrow

6 Reasons Why Savers Are Sexier Than SpendersCredit & Debt

Resolutions 2017: Save More Money Using 5 Simple TricksCredit & Debt

Porta-Potties for Presidential Inauguration Cause a StinkFamily

Protecting Trump Will Cost Taxpayers $35 MillionFamily

Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax BreaksTaxes

5 New Year’s Resolutions That Will Pay Off 10 Years From NowCollege

10 Simple Money Moves to Make Before the New YearFamily

A study finds that a 23-year-old new graduate earning about $45,500 will not be able to retire until age 75. Learn about the main factors behind this reality.

Two-thirds of retired Americans report they stopped working before age 65, according to an annual Gallup poll conducted earlier this year.

But younger Americans face a worse financial fate, according to a new study by NerdWallet.

The website found that, for a 23-year-old new graduate earning about $45,500, retirement will be pushed back to age 75 due to several factors. They include:

Rising student loan debt

NerdWallet reports that the average student loan debt is now about $35,000. That’s an increase of more than $5,500 since 2012, which means larger monthly loan payments.

Kyle Ramsay, investing manager at NerdWallet, explains:

“The student loan crisis is not only affecting new graduates’ immediate financial situation, it’s making their retirement prospects dwindle. Based on our findings, higher loan payments have the potential to reduce nest eggs by 32 percent. That’s nearly $700,000 in this scenario.”

Rising rent

Citing research from Zillow, NerdWallet reports that rent rates have increased by 11 percent nationally since 2012, which has two negative effects on young graduates’ retirement prospects.

Having to put more money toward rent means:

  • Having less money left to save or invest and, in turn, less money to gain from interest on savings and investments.
  • Having to delay homeownership and, in turn, delay the ability to build assets via real estate.

Less investing

Young adults tend to distrust the stock market, NerdWallet reports, keeping an average of 40 percent of their savings in cash, according to figures from State Street.

That could reduce their nest eggs by more than $300,000, even with a more conservative annual return of 6 percent, according to NerdWallet’s analysis.

Ramsay’s advice to young Americans echoes that given by many financial experts:

“Save more and save early. Compound interest is a powerful force that can build a comfortable nest egg. For example, if a 23-year-old invests $10,000 at a 6 percent return today, it could be worth twice that amount by the time he is 35 years old and 20 times that by the time he is 75.”

For help boosting your own retirement prospects — whether you need to pay down debt, build a budget or find an investment brokerage — check out the Money Talks News Solutions Center.

At what age did you retire, or at what age do you expect to retire? Let us know below or on Facebook.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 100 CEOs to Retire With as Much as 50 Million Families Combined

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,821 more deals!