Student Loans Hamper Retirement Savings, Especially for Older Workers

Borrowers with student debt have 20-30% less in retirement accounts compared to debt-free peers

Published on Feb. 19, 2026

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A new report finds that workers with student loan debt struggle to contribute to their retirement accounts, with the average borrower having saved $29,000 to $43,000 less than their debt-free counterparts. The issue is particularly acute for older workers nearing retirement, who have the highest average student loan balances. Experts advise younger workers to focus on retirement savings first, while those closer to retirement should prioritize paying down debt.

Why it matters

With concerns about the future of Social Security, it's critical for workers to prioritize building up their own retirement savings. However, student loan payments are eating up a significant portion of many borrowers' budgets, leaving little room to contribute to 401(k)s and other retirement accounts.

The details

The average student loan borrower pays about $6,000 per year towards their debt, which is roughly 7% of the 2024 median household income. In comparison, the average employee contributes about 9.5% of their income to 401(k) savings. This tradeoff has led to borrowers having 20-30% less in their retirement accounts than their debt-free peers.

  • In 2025, the average worker had a 401(k) balance of $144,400.
  • Student loan payments and collections resumed in 2023 after a pandemic-era pause.

The players

Kendell Frye

A certified financial planner in Boise, Idaho.

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What they’re saying

“This is where personal finance can be a little bit more personal. Some folks are going to say, 'I don't want to rely on the market to [earn a higher return] than the interest on the student loan ... other folks are happy to put money in the stock market.”

— Kendell Frye, Certified Financial Planner (Investopedia)

What’s next

Experts advise younger workers to focus on retirement savings first, contributing at least enough to get any employer match, and then putting any extra funds towards student loan payments. For those closer to retirement, the priority should be paying down debt rather than building retirement accounts, as each dollar put towards loans has more impact than investing for the shorter time horizon.

The takeaway

Student loan debt is having a significant impact on workers' ability to save for retirement, especially for older borrowers who have the highest average balances. Careful planning is required to balance paying down debt and contributing to retirement accounts in order to ensure financial security in one's golden years.