EMERYVILLE, Calif., March 13, 2018 /PRNewswire/ -- Debt often creates a sense of urgency in the world of personal finances — for young adults that usually means student loans. That urgency inspires many to delay other financial goals, including saving for retirement, while they tackle their student debt. In fact, half of the respondents to a survey said they delayed contributing to a retirement account because of their student debt. When individuals aren't sure whether to focus on debt or saving, experts often recommend both, if possible. American Financial Benefits Center (AFBC), a document preparation company that helps its clients apply for and maintain enrollment in federal repayment plans reminds federal student loan borrowers that income-driven repayment plans may help them focus on both successful student loan repayment and sufficient retirement savings.
"The decision to focus full-force on student loan payoff may be an emotional one, but retirement is important, too," said Sara Molina, Manager at AFBC. "Student loans paid for an education, but saving for retirement is like investing in your future. It's worth it to focus on that as much as possible."
Saving for retirement is similar to investing; due to compounding interest, the balance has the potential to grow over time. The earlier those savings start, the more they will grow by retirement. Therefore, financial experts advise focusing on retirement savings. And an easy way to do that is through an employer matched 401(k). Individuals should aim to set aside at least as much as their employer will match.
However, student loan debt is still important and should not be ignored; the consequences could be disastrous. Therefore, borrowers should make at least the minimum payment. But what if that payment leaves no room for retirement saving? Two options: Make more money, or pay less on student loans — without falling behind.
Federal income-driven repayment plans may allow borrowers to focus on both student loan repayment and retirement savings. By calculating payments on income and family size, IDRs may lower payments and allow borrowers to allocate more funds to a retirement account. Additionally, any student loan balance remaining after the 20- to 25-year term will be forgiven.
"Retirement may feel far away, but it's not as far as you think," said Molina. "At AFBC, we hope that our clients have the more financial freedom to focus on saving for retirement. We hope they are realizing the benefit of doing so and feel that they are on track in their financial lives."
About American Financial Benefits Center
American Financial Benefits Center is a document preparation company that helps clients apply for federal student loan repayment plans that fit their personal financial and student loan situation. Through its strict customer service guidelines, the company strives for the highest levels of honesty and integrity.
AFBC is a member of the Association for Student Loan Relief (AFSLR), and each representative on the phone has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).
To learn more about American Financial Benefits Center, please contact:
American Financial Benefits Center
1900 Powell Street #600
Emeryville, CA 94608
SOURCE American Financial Benefits Center