Paying off debt with retirement funds should be your last resort. During the pandemic, as individuals stayed home and spent less, credit card debt in the United States decreased. As the global economy began to recover, however, revolving debt began to rise in the second half of 2021 and early 2022.
Many believe they do not earn enough to save adequately. According to official data, American households’ average yearly pre-tax income is $87,432. Extend this over 30 years, and you can understand why, based on current income levels, some experts recommend saving at least $1.5 million for retirement.
Parents of college students who may have taken out loans in order to help their children pay for college stand to benefit from President Joe Biden’s proposal to erase some student debt, a potential bonanza for the retirement savings of older Americans who qualify.
The proposal includes Parent PLUS loans, which are federal loans taken out by parents to assist their children in paying for college. In families where the student and the parent took out qualified loans independently, both would be entitled to relief. Private loans and loans taken out after June 30, 2022, do not eligible for forgiveness.
Did You have Parent Plus Loan?