New research shows recent college graduates might not be able to retire until the age of 75.

Over the last few years, NerdWallet, a personal finance and information company, has predicted the retirement age for college graduates, and found there has been an increase in the cost of rent and in student debt that will affect how students save for retirement. The research showed there are additional costs such as credit card debt that also hold back recent graduates from saving the amount of money they should be saving.

Abdulaziz Shifa, an assistant professor of economics at Syracuse University, said in an email that life expectancy is increasing, which might cause the need for more resources during retirement, meaning more saving is necessary.

Even though an increase in life expectancy is a positive, Shifa said it also means there are new challenges for retirement planning.

A 23-year-old college graduate who starts saving 10 percent of their income can retire at age 70, which is about five years before the rest of their peers, according to NerdWallet.

The two most important things millennials can do in regard to money is save more and save early, said Kyle Ramsay, an investing manager at NerdWallet, in a Yahoo! Finance article.

The research shows that graduates will have a much harder time saving because when they graduate, their costs often outweigh their income. Today’s college graduates are saving only 6 percent of their income in retirement accounts that are invested in the market, according to the article.

After creating a rainy-day fund type of savings, the next step for graduates is to start saving for retirement by enrolling in a 401(k) plan, according to the article. Graduates can enroll in this plan through their employer or through an individual retirement account. An employer might match the amount of money put into the plan, so a graduate shouldn’t be leaving free money on the table, according to the article.

Janet Wilmoth, a professor of sociology and director of the Aging Studies Institute at SU, said in an email she believes that unless the Social Security system changes its program dramatically, it is unlikely that the average retirement age will increase substantially.

Wilmoth added that private savings are likely to become more important, especially since one never knows if the Social Security system has to reduce benefits because of projected trust fund deficits.

College graduates are often able to work past the average retirement age because they are in professional positions that do not require heavy labor. They tend to be in better health due in part to access to more comprehensive health insurance and high quality health care, Wilmoth said.

Published on November 17, 2015 at 9:33 pm

Contact Lauren: lmdoyle@syr.edu