Retirement Planning Tips for Adults Managing Student Loan Debt

Student loan payments and retirement savings are two major financial pressures many adults in the United States face today. With more than 43 million people carrying student loan balances—often well into their 40s, 50s, and even 60s—it’s easy to see why planning for retirement can take a back seat. At the same time, many Americans feel they’re not saving enough for the future, especially high‑earning professionals and mid‑career individuals juggling multiple financial priorities.

Financial Aid Awareness Month each February offers a timely opportunity to revisit how student loan repayment and retirement planning can work together rather than compete with each other. Whether you're paying down your own loans, managing Parent PLUS debt, or helping a child navigate education costs, there are meaningful ways to steadily save for retirement without losing momentum on loan repayment.

Take Advantage of Employer Matching Under the SECURE 2.0 Act

One of the most impactful updates in the financial landscape is the employer match on student loan payments under the SECURE 2.0 Act. With this benefit, your employer can contribute to your retirement plan based on the qualifying student loan payments you make, even if you aren’t currently contributing to your retirement plan directly.

This approach offers a powerful advantage. It allows you to build retirement savings while staying focused on reducing student loan debt. You also gain the benefit of compounding growth in your retirement account without needing to divert money away from your loan payments. For early‑ and mid‑career professionals, this can be especially useful—you can continue reducing your loan balance without falling behind on long‑term retirement goals.

If you’re unsure whether your employer offers this type of match, reach out to your HR team or retirement plan administrator. They can explain if the benefit is available and guide you through the enrollment process.

Use Extra Loan Payments Wisely

Making additional payments toward your student loans is a smart way to reduce interest and shorten your repayment timeline. However, extra payments only work in your favor when they’re applied correctly.

Loan servicers often default to applying extra payments toward future monthly bills rather than directly to the principal balance. While this may make your next payment seem lower or postpone your due date, it won’t reduce the amount of interest that accrues over time.

To ensure your extra payments actually lower your principal, you must request—preferably in writing—that additional funds be applied directly to the principal balance. This small step can create meaningful long‑term savings by cutting down the interest you’ll pay over the life of the loan.

If you’re unsure how your payments are being allocated, contact your loan servicer and ask for a breakdown. Keeping a record of your request and payment instructions can help avoid confusion later.

Reduce Monthly Payments by Increasing Pre‑Tax Retirement Contributions

Borrowers in income-driven repayment (IDR) plans can benefit from contributing to pre‑tax retirement accounts such as traditional 401(k)s, 403(b)s, or SIMPLE IRAs. Because IDR payments are calculated using your adjusted gross income (AGI), contributing more to a pre‑tax account lowers your AGI—and therefore reduces your monthly student loan payment.

This approach offers two advantages at once: you build tax‑deferred retirement savings while reducing your current loan obligations. For those pursuing Public Service Loan Forgiveness (PSLF) or similar long‑term forgiveness programs, lowering your AGI may also increase the total amount ultimately forgiven.

This strategy is especially beneficial for wealth advisors, high‑net‑worth individuals, and busy professionals with layered financial goals. By thoughtfully coordinating tax planning and retirement contributions, you can strengthen your long‑term financial position while keeping loan payments manageable.

Evaluate How Forgiveness Options Fit Into Your Overall Plan

For borrowers eligible for forgiveness programs—typically ranging from 10 to 25 years—it’s important to consider whether aggressively paying off your loans is truly the best use of your money. Paying loans down quickly can feel productive, but it may reduce the benefit of forgiveness programs while leaving less room in your budget for retirement contributions.

If forgiveness is part of your financial path, increasing retirement contributions can help in several ways: it reduces your AGI, lowers your monthly payments, and may increase the total amount forgiven at the end of the repayment period. Meanwhile, those retirement savings continue to grow tax‑deferred, supporting your long‑term financial well‑being.

Taking time to review how your repayment strategy fits into your broader financial goals can reveal opportunities to improve both your debt management and your future retirement readiness.

Smart Planning Helps You Balance Both Goals

You don’t have to choose between paying down loans and prioritizing retirement. With the right strategies in place, you can make strides in both areas. This may include checking whether your employer offers a student loan–based retirement match, confirming that extra payments are being applied correctly, increasing pre‑tax retirement contributions if you're in an IDR plan, or determining your eligibility for forgiveness programs.

Working with a financial professional can also be a significant advantage—especially for individuals with multiple income sources, more complex financial needs, or high‑net‑worth considerations. A knowledgeable advisor can help you compare scenarios, understand tax implications, and build a plan that aligns with your long‑term goals.

Finding the Right Balance

There’s a widespread belief that borrowers must choose between paying off student loans and investing for retirement. Fortunately, that isn’t the case. With thoughtful planning and the tools now available—such as SECURE 2.0 employer matching, income‑driven repayment options, and long‑term forgiveness programs—you can simultaneously work toward becoming debt‑free and preparing for your future.

Financial Aid Awareness Month is a reminder that financial education is valuable at every stage of life. If you're navigating both student loan repayment and retirement planning, now is a great time to reassess your strategy and make sure you're on a path that supports both your present needs and your long‑term financial goals.

If you’d like support reviewing your situation or creating a personalized plan, reach out. Thoughtful guidance can help you reduce your loan burden, strengthen your retirement outlook, and feel more confident about the road ahead.