This New Law Could Make It Easier to Save for Retirement and Pay Off School Loans At The Same Time

February 9, 2024

Navigating your financial journey with the heavy burden of student loan debt on your back can feel overwhelming. You’re faced with a critical decision: should you prioritize paying down those loans, or should you focus on the future, contributing to your workplace retirement plan? It’s a tough call, especially when choosing loan payments means missing out on the opportunity to grow your savings through employer retirement matches.

But there may be good news on the horizon. Secure 2.0 is groundbreaking legislation that is supposed to offer a helping hand, allowing your student loan payments to qualify for employer retirement matching contributions. It could be a win-win, enabling you to tackle your debt while also building your nest egg.

Are you wondering if this financial boost applies to you? Keep reading, because we’re about to explore how the SECURE 2.0 Act could be the solution you’ve been searching for.

What The SECURE 2.0 Act Means for The Student Loan Dilemma

For many of us, juggling student loan debt is a bit like trying to balance a coffee cup on a stack of books—tricky and maybe a bit messy, especially when we’re also trying to save for retirement. Those monthly loan payments can take a big bite out of our budgets, making it hard to stash away cash for our future selves. And when we skip on contributing to our retirement plans, it’s like missing out on the whipped cream in our favorite latte—those employer retirement matches that could seriously boost our savings.

Enter the SECURE 2.0 Act. This new legislation suggests to employers a clever workaround: treating your student loan payments as if they were direct deposits into your retirement savings account.

It means the money you’re dedicating to student loans can now help you unlock those employer retirement contributions, offering a streamlined path to beef up your retirement savings. So, let’s explore how this can help secure your financial future.

How It Works

The SECURE 2.0 Act gives employers the green light to get creative with retirement benefits, potentially turning those hefty student loan payments into a force for good in your retirement savings plan. By treating these payments as if they were contributions to your retirement account, employers can now match them, just like they would with traditional retirement contributions. Imagine that—your student loan payments not only help you chip away at your debt but also build your nest egg, without you having to put extra money into your retirement account.

This twist means you can keep focusing on paying down your student loans without missing out on the compounding interest in your employer-sponsored retirement account. It could be a game-changer for anyone who’s felt stuck between a rock and a hard place, trying to decide between paying off debt and saving for the future.

However, there’s a catch. Not every employer will automatically jump on this bandwagon. The SECURE 2.0 Act opens the door, but it’s up to individual companies to walk through it. This means the availability of this perk will vary from one employer to the next.

So, what’s your next move? Start a conversation with your employer to see if they’re planning to offer this innovative benefit starting in 2024. It could be a great opportunity for anyone looking to make their student loan payments do “double duty”.

Helping You Navigate Towards Financial Wellness

If you’re one of the many people grappling with student loan debt, this part of SECURE 2.0 Act could offer a ray of hope. Now, individuals might be able to navigate the intricate landscape of student loan relief without sacrificing their long-term retirement goals. As employers have the option to align student loan payments with retirement savings, employees can effectively manage their finances and work towards a more stable financial future.

No longer bound by the dilemma of choosing between student loan payments and retirement contributions, individuals who qualify for the benefit can strategically plan their finances for a brighter future. 

Want to take control of your financial future and that of the ones you love most? Then I invite you to meet with us for a Life & Legacy Planning Session.™ During the Session, we look at everything you own and everyone you love to determine whether your assets and your loved ones will be cared for exactly as you want if you die or become incapacitated. And if the way things are currently set up doesn’t serve you, your assets, or your family exactly as you want, we can help you develop a Life & Legacy Plan that will protect everything you love for generations to come. 

Schedule a complimentary 15-minute call with our team to get started today.

This article is a service of Schwartz Legacy Planning, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session™.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Casey Schwartz - Estate Planning Attorney Charleston, SC

Schwartz Legacy Planning, LLC

We’re estate planning attorneys who help South Carolina and Maryland families protect their loved ones from court and conflict.

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