Study Finds Debt Stopping Many From Achieving Life Goals, Many Say They’ll Be In Debt For The Rest of Their Lives
Debt can present a major roadblock for people trying to achieve life goals. One study revealed how debt derails the future plans of Americans, and many are fearful that they will be in debt for the rest of their lives.
Northwestern Mutual’s 2021 Planning & Progress Study found that Americans spend 30% of their monthly income to pay off debt other than mortgages. The biggest debt Americans face is credit card bills at 19%, according to the study. The other sources of debt are far less, including car loans at 8%, education loans at 7%, and home equity/lines of credit at 4%.
The study of 2,320 American adults discovered that debt is preventing Americans from achieving their life goals. Of the poll participants, 78% said debt had impacted their ability to achieve long-term financial security.
The survey, which took place between March 16-26, found that debt is forcing 29% of Americans to delay making significant purchases. Debt is preventing 18% of people from saving for retirement. Debt is stopping people from enjoying major life events such as buying a home (14%), having children (8%), and getting married (7%).
For some people, the debt isn’t temporary, and they expect to be straddled with financial burdens until they die. There were 9% of poll participants who said they expect to be saddled with debt for the rest of their lives. According to the survey, 14% believed they would get out of debt in the next 11-20 years. There were 20% who stated they would reach financial freedom in the next 6-10 years, and 45% anticipated being debt-free within the next five years.
The coronavirus pandemic has hindered some people from paying off their debt, while others are gaining ground. There were 34% who said it would take them longer to pay off their debt because of the COVID-19 pandemic, but 23% stated they’ll pay off their financial liabilities sooner.
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Northwestern Mutual’s 2021 Planning & Progress Study had some promising news. The poll found that Americans owe an average of $23,325 in debt, not including their mortgages, which is 20% less than the same study in 2019.
“The fact that people are making significant progress to decrease their debt is encouraging to see, especially at a time when many are still recovering from the financial impact and uncertainties prompted by the COVID-19 pandemic,” said Christian Mitchell, executive vice president & chief customer officer at Northwestern Mutual.
“The latest numbers show steps in the right direction compared to previous years, but we continue to see debt hindering many Americans from having the financial freedom to make other important decisions in their lives,” Mitchell added. “Having a plan of action to manage debt and stay on top of payments is critical to achieving future financial goals.”