Author Topic: Possible to retire with large student loan debt?  (Read 388 times)


  • 5 O'Clock Shadow
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Possible to retire with large student loan debt?
« on: May 15, 2019, 06:43:37 AM »
Hi Everyone!

I posted a case study - so loads of detail there and I am still working on suggestions.

One sidebar I wanted to ask - is it possible to retire with large student loans balances?

And if so - how to figure in those monthly payments in the calculators. And by that - I mean - I'll be having a 1300-1500/month payment, but it will stop at some point (hopefully, lol!)

I've been thinking about trying to get it paid off before thinking of retirement, but that is giving me almost no option to retire early at all.

So - if I have say 1500/month to pay for the first 5 or so years of retirement, what kind of withdrawal rate could I potential start with?

Or maybe - what is the highest WR that I can do - knowing it will decrease alot at some point?

Currently 52 - and would like to think about retiring just a few years early, but have over 100k in sls, and will likely settle in with about 130k total and begin payoffs at 54. Am currently paying on some of the loans - those will be done at about 60 (according to 10 year payment plan) - the other set will be done at about 64. 

I had been loosely planning to retire at 65 - 67, but wondering about some options and been playing with this

but it doesn't have an option for a decent sized expense decrease at a particular point.

Any thoughts about this?


  • 5 O'Clock Shadow
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Re: Possible to retire with large student loan debt?
« Reply #1 on: May 15, 2019, 06:58:36 AM »
Hi Mistymoney,

Compound interest doesn't play a huge factor in a 5-year time frame. My advice would be to calculate how much you need to retire on assuming you had 0 student loan debt, then add the total of your student loan debt to that number. That's how much you need to retire. Then it doesn't matter exactly how you space out your repayments - whether you repay it in a single day or over 50 years, you'll have enough to retire on. (Unless your student loan debt interest rate is higher than your retirement account's rate of return. In which case you're better off paying it off immediately.)
« Last Edit: May 15, 2019, 07:05:44 AM by jaylbail »


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Re: Possible to retire with large student loan debt?
« Reply #2 on: May 15, 2019, 10:15:48 AM »
The way that I think of it is buckets.  You never have a 40+-year period where your income and expenses stay the same, so it's better to break your life into chunks that reflect the different incomes/expenses over each time period, figure out how much you need for each chunk, and then add that together to figure out how much $$ you need at your retirement age to cover all of those buckets.

Example:  say you want to retire at 55, will pay student loans until 60, and then plan to claim SS at 65.  So start with the 55-60 bucket:  say you need $5K/mo to cover your costs.  Multiply by 5 years, that means that by the time you turn 55, you need to have $300K invested to cover that period.  That sounds like a lot -- but remember you're not 55 yet.  Maybe you're 45, which means your money still has time to grow.  So maybe you need $150K now to get you to $300K at 55.

Next bucket is 60-65:  at this point, your student loans are gone, so now your expenses decrease.  So maybe now you need only $3500 to cover your expenses.  That's $42K/yr x 5 years = $210K to cover that five years.  But now that's even further in the future -- so maybe you only need to have $75K invested now to have $210K in 15 years.

Then at 65 you claim SS, so now you have another source of income.  Your expenses are still $42K/yr, but now SS will cover say $22K of that.  That means that now your investments need to generate only $20K/yr.  So maybe you assume you will live until you are 90 -- so you need $20K/yr x 25 years, or $500K.  But again, you don't need that now -- that's 20 years in the future.  So maybe you only need $125K now to get you to that $500K by the time you are 65. 

So if you add all those buckets together -- $150K + $75K + $125K -- that means you need about $400K invested now to cover your changing expenses and income from your targeted retirement date until you hit 90.

Obviously this is a hugely simple illustration that doesn't account for inflation, taxes, growth of your portfolio within each specified period (i.e., you don't actually need $500K the day you turn 65, because your investments will continue to grow over the next 25 years).  But that is the concept, and it can give you a ballpark figure of how much you need to have invested to make it through.  Note also that the way I did the math is helpful to tell you how close you are now, but you can also do the math based on the $$ you need to have invested on the day that you FIRE, because that will give you a better target for your savings while you're working to get there.  And you don't need to be a math whiz -- I just use basic calculators on the web (e.g., google "how much do I need to have saved to have $500K in 15 years?" and follow the links until I find one that gives me the inputs I want).