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Student Loans Hurting Workers' Ability to Save for Retirement
Aon research finds workers with student loans have shakier financial health

LINCOLNSHIRE, Ill., Oct. 18, 2016 /PRNewswire/ -- While student loans can be a drain on short-term finances, a new survey from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), reveals that workers with student loans can also potentially feel the strain into their retirement years.

The Aon Hewitt Financial Mindset® Study, which surveyed more than 2,000 U.S. workers, found that 28 percent of respondents currently have an outstanding student loan, and it's not just younger workers. Nearly half of Millennial workers (44 percent), 26 percent of Generation X and 13 percent of Baby Boomers have student loans, and roughly half are paying at least $3,000 per year.

Aon Hewitt's data show student loans can have a long-term impact on workers' financial future. Workers with student loans are participating in employer-provided retirement plans at a lower rate than those without loans (71 percent compared to 77 percent). Even more concerning, more than half (51 percent) of workers with student loans are contributing no more than 5 percent of pay to their plan.

According to Aon Hewitt, saving less than 6 percent of pay can significantly impact retirement readiness, especially because most workers miss out on full company matching contributions. For example, a worker saving just 4 percent of pay will have accumulated a 401(k) plan balance of $351,407 at age 65, while someone saving 6 percent, will have a balance of $527,110 at age 65—a difference of $175,703.[1] 

"It is heartening to see that participation in employer retirement plans is as high as it is for workers with loans," explained Rob Austin, director of Retirement Research at Aon Hewitt. "These workers see the value in saving for retirement, but their loans are creating a speedbump. They don't need to shoulder this financial burden on their own. More employers are offering resources to help with overall financial wellbeing, budgeting and managing student loan debt. A few are even going so far as helping workers pay off their loans."

Student loans hurt financial wellbeing

According to Aon Hewitt's data, workers with student loans were more pessimistic about their financial wellbeing than those without loans. Specifically:

  • 51 percent say "debt is ruining their quality of life," compared to just 28 percent of those without loans
  • 54 percent spend time at work dealing with financial issues compared to 47 percent without student loans
  • 31 percent are worried about paying their bills, while only 20 percent of workers without loans share this concern
  • 56 percent are worried about saving for the future compared to 41 percent of those without loans
  • 27 percent said they are "financially comfortable" compared to 43 percent for their loan-free colleagues

"While it's not surprising that student loans can negatively impact workers' wellbeing, the degree to which the stress is felt should be incredibly concerning to employers because financial stress has been shown to lead to a loss in productivity," said Heather Tredup, partner and Retirement Best Practice leader at Aon Hewitt. "Implementing a financial wellbeing strategy that combines plan design, solutions, education and communication will help workers improve their financial literacy and build their confidence so they can better manage their money for today and save for the future."

About Aon
Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit:

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[1] Assumes the individual is currently 30 years old and makes $30,000, with a salary increase of 2 percent per year and their plan matches $1-for-$1. Investment returns of 6 percent per year.

Aon plc ( is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit:

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