How to pay your student loans and still save for retirement

Teresa Ghilarducci, Professor of Economics at The New School, joined TheStreet to discuss how to balance saving for retirement while paying off student loans.

Jun 20, 2024 - 22:30

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How to pay your student loans and still save for retirement

With student loan repayments starting back up, it can be hard to balance paying off debt with saving for retirement. Teresa Ghilarducci, retirement expert and Professor of Economics at The New School joined TheStreet to discuss how to navigate this financial tightrope.

Full Video Transcript Below:

CONWAY GITTENS: So tell me then, what is the strategy or the tools or the advice that you give I mean, you have a lot of people like who are saddled by student loan debt. And so how do you pay off the student loan debt and also keep in mind of building this retirement nest egg where you can get that compounding interest going?

TERESA GHILARDUCCI: Yeah so I want to talk to people who are on their own right now. And Congress should do a lot, but we need to do a lot for ourselves before we wait, as we wait for Congress to do the right thing. If you are in a situation of debt, you're paying off student debt, but you're also going to be paying off a credit card because you were sick or you loan money to your brother or to your parents. We have a lot of communities where the kid who goes to college is actually a source of money for their parent. I actually, now that I think about it, was in that situation. I was loaning money to my mother from my student loan. A lot of people have those kinds of web of connections, so you have to put your savings in buckets.

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I'm a financial counselor for the Boy Scouts and this is what I learned. You have to learn to, out of your paycheck has to go short term savings or debt, payoff it out of your paycheck, has to go medium term savings and out of your paycheck has to go your life cycle savings or your retirement savings. So you need to have little envelopes and you have to put money into those envelopes. And so the only answer is you have to take it out of your own current consumption. That's the only way you get savings. There's a lot of tips in my new book that we forgot to mention 'Work, Retirement, Repeat,' and I have a section what to do while you wait for Congress. But people can't do this on their own. There is no worker on this planet except Americans that are expected to do this on their own and it is planning for their retirement. Other countries that are just as capitalist as we are and free markety as we have a different and a better system. And it wouldn't take much for us to go from here to there.