WINDSOR, Conn., Sept. 28, 2015 — Nearly one-third of Americans would be willing to defer their retirements to help their children or grandchildren pay for college educations, according to new LIMRA Secure Retirement Institute research.
“Long ago, attending college morphed from a privilege into a necessity for so many,” said Michael Ericson, analyst, LIMRA Secure Retirement Institute and the author of the report. “With the average student loan approaching $30,000, people have been forced to shuffle around their financial priorities and obligations.”
College is so important, one third of consumers say they have reduced or would be willing to reduce the amount they are saving for retirement in order to help pay for their children’s or grandchildren’s college educations (see chart). The percentage of Americans who say they would be willing to do so decreases as people get older, with Millennials most likely to agree, according to Student Loans and Retirement: Consumer Behaviors and Attitudes.
Ericson says as tuitions have skyrocketed, Americans have put less money aside for their retirements, delayed retirement start dates and even carried debt with them into retirement.
“Four in 10 consumers (with children or grandchildren) feel an obligation to foot the college bill, so this is having consequences in other areas of their lives where money is concerned,” said Ericson. “In addition to eroding retirement confidence, these loans are causing Americans to reduce their discretionary spending.”
The report also confirmed what previous research has found: those saving for retirement are also the most likely to save for purposes other than retirement.
“Those saving in their 401(k)s are also putting money aside for college tuition. They’re doing what they can to prepare for both,” said Ericson.
For the study, LIMRA surveyed nearly 1,000 Americans in July.