NerdWallet’s analysis finds the Class of 2015 faces a retirement age pushed back to 75 — two years later than what the Class of 2013 could expect — because of increasing student loan debt, rising rents and millennials’ approach to money management. But it’s not all gloom and doom. We show how taking key steps now can bring retirement years earlier. 
 
 Millennials tend to distrust the stock market, but it’s the most productive way to build a retirement nest egg. 
 
 Rising rents paired with student debt have pushed back the retirement age for new graduates. 
 
 New Grads Won’t Be Able to Retire Until 75, Study Finds 
 
 Rising rents and increasing student loan debt have pushed the retirement age to 75 for college graduates, according to a new NerdWallet study. That’s an increase from NerdWallet’s last analysis, which used 2012 data and predicted an average retirement age of 73 for the Class of 2013. 
 
 Compared to the current average retirement age of 62 [1], today’s college graduates will work 13 years longer. And, with an average life expectancy of 84 [2], they’ll spend only 9 years in retirement. 
 
 NerdWallet’s research is based on a 23-year-old new graduate earning the current median starting salary of $45,478 [3]. 
 
 Quick facts on young graduates: 
 
 Average student loan debt: $35,051 [4] 
 
 Student loan repayment plan: 10 years 
 
 Average yearly loan payment: $4,239 
 
 Student debt and rising rents affect ability to save 
 
 Two major factors are hurting the ability of millennials to save early on, which will force them to work longer. 
 
 Increasing student loan debt: The average student loan debt is now $35,051, up more than $5,500 from 2012, when it was $29,400 [5]. This translates into larger monthly student loan payments, diverting money that could otherwise go into retirement accounts. The difference in monthly payment is more than $60 ($353 today versus $289 in 2012). 
 
 “The student loan crisis is not only affecting new graduates’ immediate financial situation, it’s making their retirement prospects dwindle,” says Kyle Ramsay, investing manager at NerdWallet. “Based on our findings, higher loan payments have the potential to reduce nest eggs by 32%. That’s nearly $700,000 in this scenario. 
 
 “The two most important things millennials can do is save more and save early,” Ramsay says. “Compound interest is a powerful force that can build a comfortable nest egg. For example, if a 23-year-old invests $10,000 at a 6% return today, it could be worth twice that amount by the time he is 35 years old and 20 times that by the time he is 75.” 
 
 What Debt Costs at Retirement 2015 2012 Average student loan debt at graduation $35,051 $29,400 Median starting salary $45,478 $44,259 Total debt payments with interest $42,385 $35,552 What debt costs in lost retirement savings at age 75* $684,474 $560,657 
 
 * If student loan payments were invested over 10 years at 6% return, compounded to age 75. 
 
 Rising rents: According to research from Zillow, rents are up 11% nationally since 2012 [6]. 
 
 “Graduates are being forced to shell out more money,” says Ramsay, and that means less going into savings. “This puts them in a tough position because not only are they unable to save early, but they’re losing out on earning interest on those savings.” 
 
 A delay in homeownership is also slowing millennials’ ability to build assets, with buyers now purchasing a first home at the median age of 33 [7]. 
 
 Millennials holding too much in cash 
 
 When millennials do find the money to save, they’re all too likely to keep their money on the sidelines. According to research from State Street, millennials have an average of 40% [8] of their saved money in cash: checking and savings accounts, and term deposits such as CDs. 
 
 Missing out on investment returns — even the semi-conservative 6% annual return used in NerdWallet’s analysis — for that portion of their portfolio could cost more than $300,000 (22% of the retirement savings they could have built with a better investment mix). 
 
 Millennials frequently report a distrust of investing and stocks, in part because they’ve lived through so much market turbulence, says Daniel Sheehan, a certified financial planner on NerdWallet’s Ask an Advisor platform. “On top of that, many have college loan debt and want to be sure they have funds to make the payments due each month while leading a life that they desire now,” Sheehan says. 
 
 “My advice to millennials I speak with is to realize that throughout the history of the investment markets, there have always been traumas,” Sheehan says. “For those who invest wisely — allowing the market time to do its work by compounding — there isn’t a better way to invest for their future than the stock market.” 
 
 Saving just a few percent more adds years of retirement 
 
 Millennials have one huge factor on their side: Time, which will allow their money to grow with compound interest over the 40 to 50 years they have until retirement. To use that time wisely, they need to increase their savings rate from the median 6% [9] where it now sits. Based on NerdWallet’s calculations, small increases make a big impact: 
 
 A 23-year-old who begins saving 10% today can shave five years off retirement age, amassing enough to leave work at 70. Saving 4% more per year amounts to $2,000 on a $50,000 salary; that’s about $165 a month. 
 
 If a 23-year-old can save 15%, it will pay off with a 10-year difference, bringing retirement age down to 65. 
 
 Someone who hits it out of the park and saves 20% or more could retire as early as age 62, today’s average retirement age. 
 
 As new grads get started on their careers, they should keep these takeaways in mind: 
 
 Living at home pays off: One big way to save is by living at home after graduation. By NerdWallet’s calculations, those who live at home until age 25 could be rewarded with a retirement that comes five years earlier, at age 70. 
 
 Maximizing employer’s matching dollars makes sense: Savers should first contribute enough to their 401(k) to grab all matching dollars offered by their employer, then direct contributions to a Roth or traditional IRA, which generally has lower expenses and a wider range of investment options. (Here’s NerdWallet’s list of best IRA account providers.) If they’re able to max out the IRA, then they should go back to making 401(k) contributions until its annual limit is reached. 
 
 Appropriate asset allocation is key: NerdWallet recommends an emergency fund of three to six months' worth of living expenses. Once that fund is established, an investment portfolio with 40% cash will not provide the kind of return that most people in this age group need to meet their retirement goals. And with retirement a long way off, new graduates can tolerate the ups and downs of the stock market. Most experts would suggest that a 23-year-old invest 80% to 90% of retirement funds in a well-diversified stock portfolio. 
 
 Help is available: Many people would benefit from working with a financial advisor to develop a plan to save for retirement; however, that option isn’t in the budget of many millennials. Consumers can always manage their own portfolios and avoid management fees. For those who want a more hands-off approach, robo-advisors are an inexpensive way to get professional investment management. These services manage investor portfolios through computer algorithms, at a fraction of what a human financial advisor might charge. 
 
 Methodology 
 
 NerdWallet’s calculations are based on a 23-year-old new college graduate, earning the median starting salary of $45,478 per year with $35,051 in student loan debt. 
 
 Rent increases have averaged 11% nationally since 2012. 
 
 Calculations assume a conservative 6% investment return and a 6% savings rate (the current median for millennials). 
 
 Calculations also assume a 50% employer 401(k) match up to 6%, and 3% annual wage increases to account for inflation and salary growth. 
 
 The required amount to retire is assumed to be 80% of final working-year income, less Social Security income, for a life expectancy of 84. In our base case at 75, this is 80% of projected final-year income of $211,513, minus projected Social Security income of $33,482, yielding a replacement annual income of $135,728 in the first year of retirement. Taking into account Social Security income rising during the 9 years of retirement, you will need a $1.189 million nest egg. 
 
 Footnotes 
 
 [1] According to a 2014 Gallup survey, U.S. retirees report retiring at an average age of 62. The most popular age at which to claim Social Security benefits is 62, according to an analysis of Social Security Administration data by The Center for Retirement Research at Boston College. 
 
 [2] Age 84 is the average of the Social Security Administration’s life expectancy estimates for current 23-year-old men and women (age 86 for women, age 82 for men). 
 
 [3] The National Association of Colleges and Employers reports that the median starting salary for the class of 2014 was $45,478. Class of 2015 starting salaries have not yet been released. 
 
 [4] The average student loan debt carried by students graduating in the class of 2015, as calculated by Mark Kantrowitz, publisher of Edvisors.com. 
 
 [5] Students in the class of 2012 graduated with an average of $29,400 in student loan debt per borrower, according to the Institute for College Access & Success. 
 
 [6] Zillow data shows that rent prices rose 11% nationally between January 2012, when prices averaged $1,227, and March 2015, when prices hit $1,362. 
 
 [7] The average first-time homebuyer is 33, according to a Zillow analysis in August 2015. 
 
 [8] A State Street survey published in May 2014 found that millennials have 40% of their investable assets allocated to cash. 
 
 [9] In T. Rowe Price’s 2015 Retirement Spending & Saving Study, millennial workers who were expecting to contribute to their 401(k) plan reported a median 6% deferral rate. 

 Sorry, Class Of 2015: You Will Have To Be At Least 75 Before You Can Retire, Study Says 
 
 Retirement always feels like forever away when you’re in your early twenties. But for the young adults among the most recent cohort of college graduates, the age of retirement really is receding further and further into the distance than it is for their older peers. 
 
 That’s the finding in a new study from the folks at Nerdwallet. Far from the 65 we all still tend to kind of conceptualize as retirement o’clock, today’s college grads will be working until they’re at least 75, the study finds. 
 
 So what’s holding a generation back? A bunch of things. 
 
 One is, predictably, student loans. If you step out of school and into the wider world at 22 with a six-figure hole in your pocket already, you’re going to have a hard time saving up any extra pennies, especially in the early years. Nerdwallet finds that the average student debt load at graduation comes in about $35,000 — and they extrapolate that those debt payments, over the course of a 50-year career, work out to over $680,000 in post potential retirement savings. 
 
 Also hurting the newest members of the workforce: high rents. Rent prices have increased 11% nationally since 2012, Nerdwallet says, which means that after the student loan and rent bills are paid every month, there’s even less left to go around (let alone into savings). Student debts also mean that young adults are less likely to become young homeowners, which means more time spent paying rent and less time spent building equity or wealth through their houses. 
 
 Lastly, Nerdwallet says, millennials who have recently graduated are skittish investors. It’s hard to blame them; a member of the Class of 2015 was probably a sophomore in high school when the stock market and global economy came crashing down around their ears. You can’t make returns on money you aren’t investing. 
 
 Nerdwallet suggests: 
 
 A 23-year-old who begins saving 10% today can shave five years off retirement age, amassing enough to leave work at 70. Saving 4% more per year amounts to $2,000 on a $50,000 salary; that’s about $165 a month. If a 23-year-old can save 15%, it will pay off with a 10-year difference, bringing retirement age down to 65. Someone who hits it out of the park and saves 20% or more could retire as early as age 62, today’s average retirement age. 
 
 Not mentioned: while some majors pay big and some students get connected to elite careers early on, good luck to most young twentysomethings in most cities and industries trying to find a job paying $50,000 or more right out of school. 
 
 So other than try to hit the lottery or marrying rich, what does NerdWallet suggest a millennial who wants to work for 40 years instead of 50 should do? 
 
 One can avoid the rent problem entirely by living at home with family until at least age 25, the site suggests. Not spending on rent between ages 22 and 25 could end up cutting a full five years off your working career at the other end. 
 
 Outside of that? Invest more aggressively, they suggest. You’re going to need to seek every employer match and look for a high rate of return in order to see real gains over the decades to come. 
 
 NerdWallet’s 2015 New Grad Retirement Report [NerdWallet] 

 (The author is a Reuters contributor. The opinions expressed are her own.) 
 
 By Bobbi Rebell 
 
 NEW YORK, Oct 21 (Reuters) - The numbers are not adding up for recent college graduates counting on a comfortable retirement. 
 
 New data from NerdWallet.com, a financial information website, suggests young people, on average, will work 13 years longer than today’s typical retirees. 
 
 Right now the average retirement age is a youthful 62. But for the class of 2015, seventy-five will be the average expected age, NerdWallet said. Given a normal life expectancy of 84 for someone now 23 years old, that leaves less than a decade to enjoy the golden years without the 9-to-5 grind. 
 
 It is a one-two punch. Along with a certificate, graduates are leaving school with considerable student debt. College graduates, on average, put out $4,239 per year to repay such debt, according to NerdWallet (nerdwallet.com). 
 
 In addition, young people are spending more time in the rental market before buying homes. With home ownership, comes home equity and valuable tax deductions. The more years they pays rent, the longer this generation is missing out on the benefits of real estate investing. 
 
 All is not lost. Here are some ways to beat the clock: 
 
 First, young people can simply live at home for a while. That knocks rent right off the budget. 
 
 Live with family until age 25, and you can narrow the finish line to an age 70 retirement by five years, according to NerdWallet. 
 
 But you cannot invest like grandma if you want to retire as young as she did. Young people need to be fearless, which often means putting the vast majority of assets into stocks. 
 
 Too many millennials are keeping cash on the sidelines, says Kyle Ramsey, investing manager at NerdWallet. 
 
 “They lived through a very turbulent financial period when they saw their parents finances hurt by the (credit) crisis,” Ramsey says. “They are shell-shocked by the market and keeping their cash in savings accounts.” 
 
 START WITH A 401(K) 
 
 The first place to start saving for retirement is generally a workplace 401(k) or an equivalent, if offered. In many such plans, employers match some worker contributions; that is like free money. 
 
 Individual retirement accounts (IRAs) are also key retirement vehicles, especially if you do not participate in a plan at work. Traditional IRAs can be seeded with pre-tax dollars, while contributions to Roth IRAs are made with after-tax money. 
 
 Certified Financial Planner Carina Diamond of SS&G Wealth Management suggests a three-pronged approach to younger clients: Cut debt, invest more and make sure you have an emergency fund. 
 
 Most of all, have a financial plan. Unlike grandpa, young people today can tap into a new breed of investment companies for help, including robo-advisers, which use automated algorithm-based financial planning. 
 
 One of the largest robo-advisers is Wealthfront, which requires a $500 minimum investment but will manage the first $10,000 for free. Competitor Betterment has no minimum and charges as little as a 0.15 percent management fee. 
 
 Diamond also advises spending an hour with a fee-based financial planner, who can make sure you are not overlooking any circumstances that might not be picked up by the robo-advisers’ algorithm. 
 
 The key message for today’s college grads? Work does not have to be a grind. 
 
 “Fewer millennials are in jobs that they hate. Some of their parents were miserable dragging themselves to work,” Diamond notes. 
 
 Those paydays may go on a bit longer, but the payoff will be there when retirement eventually arrives. (Editing by Lauren Young)
– We sure hope this year's college grads are excited to enter the workforce because they'll be in it for a long time, according to a new study from NerdWallet. Researchers there say graduates of the Class of 2015 will likely be working until at least 75—a full 13 years past today’s average retirement age of 62. Considering that the life expectancy for a 23-year-old is 84, that means most will have less than a decade to enjoy their golden years, per Reuters. Here's why: For one thing, it's really hard to save when you're trying to pay off a hefty student loan. The study finds the average student owes $35,000 at graduation, reports Consumerist. Perhaps that seems manageable. But when you extrapolate the debt payments over 50 years, it equals $680,000 in lost retirement savings. Then there's the two-pronged issue of renting. Not only do rent payments take away from savings, but rent prices are spiking, up 11% nationally since 2012. And because grads are already in debt, they're likely to rent longer, which means less time spent building equity as a homeowner. Here's another problem: The Class of 2015 is hesitant to invest. "They lived through a very turbulent financial period when they saw their parents' finances hurt," says an investing manager. Aggressive investing may help slash your retirement age, but there are other options. Want to throw in the towel at 62? A 23-year-old who starts saving 20% of a $50,000 salary can make it happen. Saving 15% will push the age to 65, while saving 10% will raise it to 70. Don't make $50,000? Cut back on expenses by living with your parents. Three years' worth of saved rent could cut five years off your career. (Millennials aren't the only ones who should be worried about retirement.)