A new survey shows 42 percent of Americans age 39-54 are more focused on debt repayment than saving for retirement. The top factor was unexpected expenses like home repairs, cited by 38 percent. But credit card debt came in a strong second, at 31 percent.
Americans in their 40s and early 50s have retirement on the not-so-distant horizon. Yet more than 4 in 10 say they are prioritizing paying off debt over contributing to their 401(k).
The finding comes from a survey by Schwab Retirement Plan Services, which surveyed 401(k) participants in Generation X, who are ages 39 to 54. When asked whether they were more focused on saving for retirement or paying off debt, 42 percent indicated debt repayment.
The top factor getting in the way of respondents adding to their 401(k) was unexpected expenses like home repairs, cited by 38 percent. Credit card debt came in a strong second, at 31 percent, and another debt obligation, the respondents’ own student loans, was indicated as an obstacle by 11 percent.
Almost 3 in 10 said the need to cover their bills each month was thwarting their retirement savings efforts (29 percent), and 22 percent reported feeling the pinch due to paying for their children’s education or tuition.
The survey also asked Gen Xers what causes them the most money stress. Saving enough for retirement took the top spot, at 40 percent of respondents. And credit card debt followed as the second biggest source of financial anxiety, at 27 percent.
Schwab’s survey of 1,000 U.S. 401(k) participants was conducted online by Logica Research in mid to late March 2019, with results released Sep. 10.