What Adults Managing Student Loans Should Understand About Planning for Retirement

Across the United States, two major financial issues consistently rise to the top for many adults: lingering student loan debt and the pressure to save enough for retirement. With more than 43 million people still carrying student loans—and many continuing payments well into their 40s, 50s, and even 60s—retirement planning can easily slip down the priority list. At the same time, studies show that a significant portion of Americans feel that they’re behind when it comes to building their retirement nest egg. This is especially true for high-net-worth individuals, seasoned professionals, and mid-career earners who are juggling several financial responsibilities at once. As Financial Aid Awareness Month arrives each February, it offers a chance to step back and consider how to balance these two major goals. With the right strategies, you can make real progress on loan repayment without sacrificing your long‑term financial security. If you’re repaying Parent PLUS loans, managing your own federal or private student debt, or assisting a child with educational expenses, here are key insights to help you move forward on your retirement goals while staying on track with your loans. Leverage Employer Opportunities Available Through the SECURE 2.0 Act One of the biggest recent developments for borrowers is the student loan payment match created under the SECURE 2.0 Act. This provision allows employers to match qualifying student loan payments with contributions to a workplace retirement plan such as a 401(k), even if you aren’t contributing to the plan yourself. This can be a game changer. It means you don’t have to choose between putting money toward retirement or focusing on loan payments—you can do both at the same time. Better yet, those employer contributions can take advantage of compound growth, giving your retirement savings a meaningful boost while you stay focused on reducing your debt. For early- and mid‑career professionals, this option is especially valuable. If you’re eager to watch your loan balance shrink but don’t want to fall behind on retirement planning, this benefit helps bridge that gap. To get started, check with your HR department or your plan administrator. Ask if your company participates in this SECURE 2.0 benefit and what you need to do to enroll. Be Strategic About Making Extra Student Loan Payments If your goal is to pay down student loans ahead of schedule, adding extra payments can absolutely work in your favor—but only if those payments are applied correctly. Many servicers automatically treat additional payments as early payments toward future bills instead of applying them directly to the principal balance. While being “ahead” may sound helpful, it doesn’t cut down the amount of interest you’ll owe over the life of the loan. To ensure your extra payments truly shorten your repayment timeline, you need to tell your servicer—preferably in writing—that any additional payments should be applied to the principal. This simple step can significantly reduce the total amount you pay in interest. If you’re unsure how your payments are being allocated, reach out to your loan servicer for clarification and keep documentation of your request. Use Retirement Contributions to Reduce Monthly Student Loan Payments If you’re enrolled in an income-driven repayment (IDR) plan, contributing to a pre-tax retirement account such as a traditional 401(k), 403(b), or SIMPLE IRA can lower your monthly student loan payment. Because IDR payments are based on your adjusted gross income (AGI), reducing your AGI through retirement contributions directly lowers what you owe each month. This approach offers two advantages at once. You’re building retirement savings that grow tax‑deferred while also giving yourself breathing room in your loan repayment budget. For those pursuing Public Service Loan Forgiveness (PSLF) or another forgiveness pathway, lowering your AGI may even increase the amount of debt ultimately forgiven. This strategy is particularly useful for RIAs, advisers, and high‑net‑worth individuals who are managing multiple objectives simultaneously. Adjusting your retirement contributions can create a noticeable impact on both your tax situation and your cash flow. Include Long‑Term Forgiveness Options in Your Planning For borrowers who qualify for forgiveness programs that span 10 to 25 years, it’s important to question whether throwing extra money at your loans is always the smartest move. While paying off debt quickly can feel satisfying, it could limit the benefit you gain from forgiveness programs and leave fewer resources available for retirement contributions. If you expect to receive forgiveness, prioritizing retirement savings may offer stronger long‑term advantages. Increasing pre‑tax contributions reduces your AGI, lowers your monthly payments under IDR, and increases the overall amount forgiven. Meanwhile, your retirement funds continue to grow, helping ensure stability later in life. Stepping back to view your entire financial landscape may reveal opportunities to better align your repayment plan with your long‑term retirement goals. Practical Planning Can Help You Achieve Both Goals Managing student loans while building retirement savings doesn’t have to be a choice between one or the other. With intentional strategies tailored to your income level, tax situation, and financial priorities, you can make steady progress on both fronts. Consider steps such as: • Confirming whether your employer offers 401(k) matching for student loan payments. • Ensuring extra loan payments are directed toward your principal balance. • Increasing pre‑tax retirement contributions if you’re on an IDR plan. • Reviewing whether you qualify for loan forgiveness programs. For those with complex financial portfolios, multiple income streams, or high‑net‑worth considerations, partnering with a financial advisor can offer clarity. An advisor can help you evaluate your options, understand tax implications, and map out how different strategies fit together. The Bottom Line: You Don’t Have to Choose The idea that you must pick between paying off student loans or saving for retirement is a myth. With thoughtful planning, you can advance both goals—especially now that tools such as SECURE 2.0 benefits, income‑driven repayment plans, and forgiveness programs are increasingly accessible. Financial Aid Awareness Month serves as a helpful reminder that financial education matters throughout every phase of life. If you’re balancing student debt with retirement ambitions, this is a great time to reassess your plan and move forward with confidence. If you’d like support reviewing your financial picture or determining next steps, consider reaching out. A personalized strategy can help you reduce your debt burden, strengthen your retirement outlook, and feel more prepared for the path ahead.