LINCOLNSHIRE, Ill.,
Oct. 18, 2016 /PRNewswire/
-- While student loans can be a drain on short-term finances,
a new survey from Aon Hewitt, the global talent, retirement and
health solutions business of Aon plc (NYSE:AON), reveals that
workers with student loans can also potentially feel the strain
into their retirement years.
The Aon Hewitt Financial Mindset® Study, which
surveyed more than 2,000 U.S. workers, found that 28 percent of
respondents currently have an outstanding student loan, and it's
not just younger workers. Nearly half of Millennial workers (44
percent), 26 percent of Generation X and 13 percent of Baby Boomers
have student loans, and roughly half are paying at least
$3,000 per year.
Aon Hewitt's data show student loans can have a long-term impact
on workers' financial future. Workers with student loans are
participating in employer-provided retirement plans at a lower rate
than those without loans (71 percent compared to 77 percent). Even
more concerning, more than half (51 percent) of workers with
student loans are contributing no more than 5 percent of pay to
their plan.
According to Aon Hewitt, saving less than 6 percent of pay can
significantly impact retirement readiness, especially because most
workers miss out on full company matching contributions. For
example, a worker saving just 4 percent of pay will have
accumulated a 401(k) plan balance of $351,407 at age 65, while someone saving 6
percent, will have a balance of $527,110 at age 65—a difference of $175,703.[1]
"It is heartening to see that participation in employer
retirement plans is as high as it is for workers with loans,"
explained Rob Austin, director of
Retirement Research at Aon Hewitt. "These workers see the value in
saving for retirement, but their loans are creating a speedbump.
They don't need to shoulder this financial burden on their own.
More employers are offering resources to help with overall
financial wellbeing, budgeting and managing student loan debt. A
few are even going so far as helping workers pay off their
loans."
Student loans hurt financial wellbeing
According to Aon Hewitt's data, workers with student loans were
more pessimistic about their financial wellbeing than those without
loans. Specifically:
- 51 percent say "debt is ruining their quality of life,"
compared to just 28 percent of those without loans
- 54 percent spend time at work dealing with financial issues
compared to 47% without student loans
- 31 percent are worried about paying their bills, while only 20
percent of workers without loans share this concern
- 56 percent are worried about saving for the future compared to
41 percent of those without loans
- 27 percent said they are "financially comfortable" compared to
43 percent for their loan-free colleagues
"While it's not surprising that student loans can negatively
impact workers' wellbeing, the degree to which the stress is felt
should be incredibly concerning to employers because financial
stress has been shown to lead to a loss in productivity," said
Heather Tredup, partner and
Retirement Best Practice leader at Aon Hewitt. "Implementing a
financial wellbeing strategy that combines plan design, solutions,
education and communication will help workers improve their
financial literacy and build their confidence so they can better
manage their money for today and save for the future."
About Aon
Aon plc (NYSE:AON) is a leading global
provider of risk management, insurance brokerage
and reinsurance brokerage, and human
resources solutions
and outsourcing services. Through its more than
72,000 colleagues worldwide, Aon unites to empower
results for clients in over 120 countries via innovative
risk and people solutions. For further
information on our capabilities and to learn how we empower results
for clients, please visit: http://aon.mediaroom.com.
Follow Aon on Twitter: https://twitter.com/Aon_plc
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Media Contacts:
Patrick
Messenger, 312.381.5792,
patrick.messenger@aonhewitt.com
MacKenzie Lucas, 847.442.2995,
mackenzie.lucas@aonhewitt.com
[1] Assumes the individual is currently 30 years old and makes
$30,000, with a salary increase of 2
percent per year and their plan matches $1-for-$1.
Investment returns of 6 percent per year.
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SOURCE Aon plc