Student loan debt may prevent retirement security for millions of older workers, research finds

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For most Americans, living well in retirement depends on how much they can save in their working years. But for millions of older individuals, unpaid student loan debts may put that goal out of reach, according to new research from the Schwartz Center for Economic Policy Analysis at the New School for Social Research. The research evaluated more than 2.2 million people over age 55 with outstanding student loans, according to the Federal Reserve Board's 2022 Survey of Consumer Finance. That includes more than 1.4 million workers and more than 820,000 unemployed people aged 55 and over who had taken student loan balances for themselves or their spouses. The data does not include older Americans who have taken on student loan debt on behalf of their children. Half of the borrowers over 55 and still working were earning less than $54,600 — a "major financial vulnerability," the research finds. Those who had not completed their degrees were more likely to be at financial risk since their incomplete education likely did not increase their earning power. That includes about 14.9% of workers aged 55 to 64 and 17.3% of workers aged 65 and over, according to the research. More from Personal Finance: Why people don't wait to claim Social Security You may be saving more in your 401(k) and not even know it Why not to tap into retirement savings to buy a home The bottom 50% of older earners — with incomes less than $54,600 — owe the highest average debt of $58,823. The middle 40% of earners — with incomes between $54,600 and $192,000 — owe an average debt of $48,174. The top 10% — earning more than $192,000 — owe an average of $33,000. "Lower-income and middle-income or older workers have the largest amount of debt and are then faced with difficult decisions about whether to reduce their retirement savings, or to work longer and delay retirement to repay their student loans," said Karthik Manickam, a research associate at the Retirement Equity Lab at the Schwartz Center for Economic Policy Analysis. For older workers aged 55 to 64, it may take an average of 11 years to pay off their student loans, according to the research. Workers 65 and up may need 3.5 years. "Older workers do not have decades of future potential work that younger workers have to repay their loans," Manickam said.