Americans hold a lot of debt. Whether credit card, auto loan, student debt, or other types – the total clocks in at just under 14.9 trillion.1 While often necessary, debt can create obstacles when it comes to saving for retirement.
Recent research conducted by BlackRock as well as the EBRI Retirement Confidence Survey both offer insight into the ways debt unequally burdens workers. It even impacts the ways people think about spending once they retire.
Unsurprisingly, debt appears to be less of a problem for higher income groups according to the EBRI research. But that’s not to say debt has equitable effects within income brackets, even amongst high earners.
According to those polled by EBRI, Black and Hispanic Americans across all income levels are more likely to report having a level of debt that is problematic compared to other demographics. Of those earning $75,000 or more, 62% of Black people and 58% of Hispanic people report that debt is a problem. And for those at lower income levels, it increases to 80%.
BlackRock’s 2021 DC Pulse research highlights how high levels of debt impacts saving behavior and confidence around plan participants’ financial future. 49% of workers say that when they feel confident about their short-term finances, it makes them feel more confident about their long-term finances.
With new insights, we also now know that debt doesn’t just influence the savings patterns of plan participants. Heavy and even minor debt burdens are impacting the ways people think about spending their retirement savings once they stop working too.