How to save for retirement while paying off student loans

The Street

Teresa Ghilarducci, Professor of Economics at The New School, joined TheStreet to discuss how to balance saving for retirement while paying off student loans.

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00:00What is the strategy, or the tools, or the advice that you give?

00:04I mean, you have a lot of people who are saddled by student loan debt, right?

00:09And so how do you pay off the student loan debt,

00:13and also keep in mind of building this retirement nest egg

00:18where you can get that compounding interest going?

00:21Yeah, so I want to talk to people who are on their own right now.

00:27Congress should do a lot, but we need to do a lot for ourselves

00:31as we wait for Congress to do the right thing.

00:34If you are in a situation of debt, you're paying off student debt,

00:39but you also could be paying off a credit card because you were sick,

00:42or you loan money to your brother or to your parents.

00:45We have a lot of communities where the kid who goes to college

00:49is actually a source of money for their parents.

00:52I actually, now that I think about it, was in that situation.

00:55I loaned money to my mother from my student loan.

00:58A lot of people have those kinds of web of connections.

01:02So you have to put your savings in buckets.

01:06I'm a financial counselor for the Boy Scouts, and this is what I learned.

01:10You have to learn to, out of your paycheck has to go short-term savings or debt payoff.

01:17Out of your paycheck has to go medium-term savings,

01:21and out of your paycheck has to go your life cycle savings or your retirement savings.

01:26So you need to have little envelopes, and you have to put money into those envelopes.

01:31And so the only answer is you have to take it out of your own current consumption.

01:36That's the only way you get savings.

01:38There's a lot of tips in my new book that we forgot to mention,

01:42Work, Retirement, Repeat.

01:44And I have a section, What to Do While You Wait for Congress.

01:47But people can't do this on their own.

01:50There's no worker on this planet except Americans that are expected to do this on their own,

01:59and it is planning for their retirement.

02:01Other countries that are just as capitalist as we are and free-marketing as we are

02:07have a different and a better system.

02:09And it wouldn't take much for us to go from here to there.

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