Save For Retirement And Pay Off Student Loans With New Company Perks

It’s no secret that student loans are one of the biggest financial problems Americans face.

And the problem isn’t going away any time soon. College debt has ballooned by 66% in the last decade, totaling a whopping $1.77 trillion, and chances are it’ll keep going up.

However, many US companies can finally help workers ease their loan burden and build a retirement fund thanks to new legislation.

Let’s explore Secure 2.0’s provision and how it can help you secure your financial future!

What Is Secure 2.0?

Secure 2.0 marks a shift in how companies can structure employee benefits.

Among its provisions, it lets employers make 401(k) contributions whenever you pay off a student loan. The contributions will still happen even if you’re not building a retirement fund.

Let’s take Verizon’s new program as an example. If employees contribute 3% of their income to their loans and 3% to their retirement, Verizon will match their contributions with 6% to their 401(k) plan.

Thanks to this program, many former grads won’t need to make the tough decision between paying off debt and saving up for their golden years.

Freedom 2 Save: The Inspiration Behind This Perk

While these benefits seem like a new concept, Abbott’s “Freedom 2 Save” program, which helped its employees save thousands in their retirement accounts, was the blueprint for making them happen.

Seeing how it benefited workers, the IRS approved the concept, and Congress codified it into law with Secure 2.0 in 2022.

With the benefits of linking student loan payments with retirement savings contributions, other employers will jump on the bandwagon and follow suit.

Who Would Benefit The Most?

This perk will mainly benefit young professionals who have been bearing the brunt of student loans for years.

Because of the added financial pressure, many face the tough choice between paying down debt and saving for retirement. This reality is especially true for those who work for industries with higher education requirements, like healthcare and professional services.

Regardless of where you are financially, anyone still paying loans has much to gain as more companies find ways to retain top talent by offering better benefits.

Why Are Employers Supporting This Program?

More companies are realizing the connection between financial wellness and employee satisfaction. Employees nowadays are also looking for more than a simple paycheck. They want to work where they feel heard, understood, and cared for.

By offering benefit packages that address an employee’s financial needs, like student debt and retirement, companies can keep their workforce happy and become places top talent genuinely wants to work for.

When Can We Start Seeing These Perks?

Following Secure 2.0, several leading companies like Verizon and Chipotle have come out with new benefits. It’s only a matter of time before most larger companies create their own packages.

As businesses work out the logistics, expect to see more of these perks towards late 2024 and beyond.

The Bottom Line

Tackling student loan debt and 401(k) contributions under Secure 2.0 allows you to focus on building your future.

For the first time, many Millennials won’t need to choose between saving for retirement or chipping away at student loans. Your company has the chance to help ease your student loan burden and enhance your long-term financial security.

If you’re interested in this benefit, speak to your HR department to see if your company will offer it in the future and how to enroll. The earlier you sign up, the more you can take advantage of it and start saving!

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