Here are two truths for graduates: the best time to save for retirement is in the 20s and the student loans are expensive. If you find yourself in front of these two realities, you may be unsure about how to start saving your pension if you have trouble paying off your student loan.
Student loans put many pension savings plans at risk for many individuals. When student loan repayments remove a large part of your salary, you have less chance of saving money and investing in your pension account. The money that you invest in your pension fund in your twentieth and early thirtieth year has the most potential to double and triple. If you start saving for your twentieth birthday, you can save less and earn more. If you start saving at 35-50, you must save more and you will receive less interest on the accrued interest. (Read for more information Why save for retirement in your 20s ?)
Don't let your student loans ruin your financial stability before you retire. Do not postpone retirement savings, because you don't think you can pay with your student loans. By postponing retirement saving, you now run the risk that you can no longer afford it at the age of 65. Here are some solutions to prevent your debt in your loan loans from reducing your retirement savings.
Benefit from company 401 (k) Benefits
Look at the 401 (k) options and benefits of your company. If your company offers a match for savings, make the most of it. Even if the match of your company seems small with a match of one to three percent, this can easily amount to $ 1, 000 or more per year.
When you sign up for the 401 (k) option of your company, you can have the money taken directly from your paycheck. This allows you to make saving a priority, and you don't even think about saving for your pension. It just happens automatically. In addition, your contributions are not taxed as income, which means that you can fall into a lower tax bracket and be useful when filing tax returns.
(work for a company that does not offer 401 (k), be sure to read My employer does not offer 401 (k). Do I care?) <Minimizing student loan payments
Do not be complacent about the debt of your student loan. You may have 10-20 years to pay it off, but the sooner you pay it, the better. The first thing you want to take advantage of is forgiveness from student Reconsideration or cancellation programs. Those with federal loans can receive loan forgiveness through volunteering through AmeriCorps and other approved programs. Working in a function of general interest or non-profit organization, such as teaching in a low-income area, can also provide you with Federal Direct Loan forgiveness. Take advantage of these programs while you are young or have no family that depends on your income. Not only with these programs, erase a lot of debts, but these positions can also be used in your resume.
Another way to minimize student student loans is to refinance high-interest private loans. Refinance to guarantee a lower interest rate and a lower monthly payment. Avoid extending the life of your loan, because this will only cost you more in accrued interest. Also check before applying for a refinancing whether your credit score is as high as possible. (Also see,
How can I improve my credit score? ) Look into Federal Repayment Plans
There are various repayment plans available for federal loans. Income-driven repayment plans are available and can allocate people with payment limits based on their income and family size. Call your lender for more information about income-related repayment plans.
Student loans: what to do if you cannot repay them .) Reduce flexible costs
Loans for studentBackbacks are not flexible costs that you can save on your budget. However, there are many other costs that you can minimize. It is not easy or desirable to live well under your means, but it helps you pay off your debt and save faster for your retirement. Look at your current budget. It is possible to shave $ 25, $ 50 or $ 100 every week.
Many people are surprised that they can save up to $ 100 a week by reducing the consumption of fast food and coffee, lowering the cable or gym bill or getting a roommate. Some may even save a lot of money by using a driving service, such as Uber or Lyft, instead of owning a car.
It is crucial not to take on any more debts while you pay the debt of your student. More debts make your budget even thinner, making it almost impossible to contribute as much as possible to your pension fund.
The bottom line
Repaying the debt of student Reconsideration puts you under financial pressure. However, the debt of your student loan does not prevent your pension savings. This is the time to save for your retirement, so take full advantage of the time you have. Even contributing $ 100-200 per month to your pension fund is better than nothing. Do not write off pension savings for when you earn more or when you have repaid all your student loans. When that time comes, you are already far behind in the pension saving game.