The Millennial Generation and Student Loan Debt

The Millennial Generation and Student Loan Debt |


I was born smack-dab in the middle of what most people label the Millennial Generation. There are a ton of stereotypes about us, but the one I find to be the most accurate among my peers is we live for the moment. We might have a savings account, and some of us have a 401k, but it’s rare to find anyone who is maxing out either of them.

I started 2017 entering my 30s, and suddenly realized planning for retirement is a reality I have to face. I started following some financial blogs for advice and instantly was overwhelmed by the information I was reading. Depending on which source you read, the average recommendation is you should have close to $30,000 in your 401k by the time you turn 30. As of right now, I have around $8,000.

I consider myself one of the lucky ones, in that I paid off my student loans by the time I was 24. I went to a state university, lived off campus, and paid for my books out-of-pocket each semester to avoid taking out hefty loans. Unfortunately, this was not an option, or the path, that many of the people I know followed. I also will admit I was personally miserable about this decision until the day I paid off my loans. I missed the typical college experience of moving away, living in dorms, and racking up enough debt to buy a yacht before I could legally drink alcohol.

Student loans are hurting a lot of people my age, and it makes us uncomfortable about saving for our future. If your four-year education cost you $25,000, you will be paying around $280 a month on that loan for the next 10 years. I know a lot of people who paid around $25,000 per semester and barely have managed to make a dent in paying it back almost a decade later.  

The reality is that most of us do not make enough money to live comfortably, pay our student loans, maintain an emergency fund, and contribute enough to our 401k for retirement. As many people are leaving college they start to look toward starting a family. Often, they are not able to start saving for their children’s college fund since they haven’t even paid off their own yet.

What does this mean for us when we are older?

As of now, Social Security is paying benefits to 61 million people each month. More than half of the retired workers collecting Social Security reported it represents at least half of their monthly income.

Right now, many baby boomers are retiring, and many are living longer lives. This is incredibly dangerous for future generations looking toward retirement. The Social Security program’s expenses have exceeded its cash receipts since 2010. Until 2020, the program will use interest earned from its U.S. Treasury bonds to cover the shortfall. After that, it will begin redeeming its U.S. Treasury bonds for cash. The earliest a non-disabled person can receive Social Security benefits is  62 years old. That means Millennials, basically those born between 1982 and 2004, will start hitting this age around 2043, 20-plus years after the program has begun drawing down its bond reserves.

The current Social Security payout puts Americans just slightly above the poverty line, without additional income available to them. Any cut to benefits could be devastating to many who are relying on that income.

These numbers initially shocked me. They made me question a lot of the standards I have for how I spend my money. It is difficult for me to look too far ahead since I’ve grown up in a generation that values experience more than items. Even if it means giving up my quality of life for a period of time, or working two jobs, I will justify going on a vacation for the experience it provides. It is hard for me to do the same when it comes to my retirement, which still could be 40 years away. I’ve always lived more concerned with the thought that I could die tomorrow, so I shouldn’t miss out on an opportunity, then what will happen to me when I’m older if I am not prepared.

Many of us are starting our adult lives already in student loan debt. We also are starting families and buying houses before we ever pay off our education. It is scary for me to think how many people are thinking far enough ahead to our future to realize we might not have Social Security benefits to rely on. Without a change to the current Social Security system, this could be a reality we might have to face soon.

The earlier in your life you can change your budget and spending (and saving) habits, the easier it will be to stick with it. Talking with a financial advisor I easily was able to figure out new goals for my 401k contribution, how to grow my two-month emergency fund into a six-month fund, and learn about other options available for me to invest in for my future.

Regardless of where you are in your financial journey, it is important to at least start prioritizing long-term savings, and not always focusing on short-term satisfaction.


What steps are you taking to save for your future retirement?

Ericka grew up in Upstate, New York where she graduated with a degree in communications from the University at Albany. She currently lives in San Diego and works as a public relations specialist.


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  1. Tammy H

    This article really resonated with me. My husband and I have student loan debt, we just bought a house a few months ago, but I am still not where I want to be as far as contributing to my retirement. I managed to save $250ish a month including my work 401k and my Roth IRA, but no where near close to maxing these out. It bums me out because we want to have children, but realistically, we won’t have what we need to have children for a really long time.


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