The expected retirement age for today’s college graduates is 73

by Grace

College debt pushes retirement age for today’s college graduates to 73.

Having to spend “the first ten years (or more) of their careers paying off their hefty loans” will mean a postponed retirement for “debt-straddled” college graduates.

With the total amount of outstanding student debt approaching $1 trillion, the plight of debt-straddled college students is more important than ever. In the past 30 years, not only has the number of high school graduates enrolled in four-year universities increased by 11%, but college tuition has also soared over 200%. As more students attend college at a cost higher than ever before, Millennials have increasingly turned to loans to help finance their education. While much of the college debt dialogue is over immediate issues like employment and repayment, there is another glaring challenge that graduates will have to deal with for years to come: retirement.

When will students be able to retire given that many are spending the first ten years (or more) of their careers paying off their hefty loans? NerdWallet conducted a study that examined the financial profile of a typical college graduate and found that while retirement is certainly not impossible, for most it will have to wait until their early to mid 70s— over 10 years later than the current average retirement age of 61.

Starting late to save for retirement

Clearly, student debt has an impact on retirement outcomes. Currently, the average retirement age is 61. But for most of today’s college grads, the realistic retirement age will be closer to their mid-70s. Given an average life expectancy of 84, this will leave only 10-12 years for people to spend in retirement. The main reason for this is that although the median college graduate leaves with a seemingly manageable $23,300 debt load, 7% of a student’s earnings go toward yearly loan payments of $2,858 for the first ten years of his or her career. This prevents any meaningful contributions toward retirement. In fact, by the age of 33, when the typical college grad has finally paid off their standard 10-year loans, he or she can only be expected to have saved $2,466 for retirement—over $30,000 less than if the student had graduated with no debt. Even worse, the foregone savings carry a serious opportunity cost, as this money would have been earning a compounded rate of return every year until retirement. At the projected retirement age of 73, the lost savings directly attributable to student debt is $115,096, nearly 28% of total retirement savings.



Average retirement age is on the upswing.


College debt just exacerbates the trend for some people.

The college wage premium may not offset lost retirement savings.

On average, the college wage premium may offset the lost retirement savings caused by paying down student debt.  But on an individual basis, results may vary.  Any boost in income related to a college degree is highly dependent on the field of study and the student’s ability.  For example, how much of a wage premium will the C-average, ethnic studies college graduate actually receive?

Related:  The challenge of paying for college and saving for retirement at the same time (Cost of College)

5 Comments to “The expected retirement age for today’s college graduates is 73”

  1. The average retirement age is 61???? I thought that Medicare didn’t kick in until 65 and full SS not until 67? How do people finance their health care at 61?

    The retirement age is going to go to 73 independently of college debt because everyone wants to cut SS and that may be the easiest way. I certainly don’t expect to retire before 70. Back when I was in college, we used to joke that there wouldn’t be any SS for us, because we could see the demographic reality of being the first post-baby-boom group, and sadly we were right


  2. Thinking about it, I suspect that figure is so low because it probably includes people who were forced out of the job market unwillingly due to layoffs, and people who stopped working while still pretty young due to disabilities. Those people are usually in very bad financial shape with or without college debt, and it is something that isn’t likely to change. So I doubt the *average* retirement age, if calculated the same way, will actually rise to 73.


  3. That 61 average age encompasses all types of workers, including public service employees who can and do retire much earlier than many in the private sector. It seems about right to me.

    No doubt the retirement age is rising, as it should. But all else being equal, the burden of a student loan will set back the date because it cuts into possible contributions to a retirement plan.

    The increasing numbers of people with advanced degrees probably also probably pushes back retirement age, as these individualists begin “working” and saving for retirement at a later age than many others. I’ve read a few stories about PhDs, for example, who are playing catch-up with retirement saving in their 40s and beyond.


  4. I suspect it also includes people forced into retirement because of layoffs or disability. There are a lot of those folks. That isn’t going to change – someone who is laid off at age 55 is likely to be forced into retirement, student loans or not – so you may not see as much of a rise as you might think.


  5. Yes, I thought about those early retirements, too. I know disability filings have risen sharply recently.


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