Americans seem to be getting more serious about eliminating debt, and that could be holding down their retirement savings.
Northwestern Mutual found evidence of crowdout when it conducted an online survey of 2,740 U.S. residents ages 18 and older earlier this year.
The percentage of participants who said they had non-mortgage debt fell to 67% this year, from 68% in 2019, before the COVID-19 pandemic began.
Over that same period, the non-mortgage debt load of the average participant with debt fell to $21,800, from $29,803.
What It Means
For a typical survey participant, over the past four years, about $8,000 in cash that could have flowed into an IRA, a 401(k) plan or an annuity was used to pay down debt.