Make debt management a priority

It may not be as much fun as picking investments, but financial advisers could do their clients a whole lot of good if they started paying more attention to their debt levels. Three new reports document how consumer debt is crowding out retirement savings. In perhaps the most alarming of the studies, HelloWallet found that from 2010 to 2011, 64% of participants in defined-contribution plans accumulated debt at a faster rate than they accumulated retirement savings. Forty percent of respondents to a recent Wells Fargo survey complained it's impossible to pay their bills and save at the same time.

COLLEGE DEBT BURDEN

A separate study by NerdWallet found that crushing student loan debt could mean that the average Millennial college graduate may not be able to retire until he or she is 73 years old. While 401(k) innovations such as automatic enrollment and auto-escalation policies have helped boost retirement savings, if it comes at the expense of solid financial planning, it doesn't do anyone any good. Consumers are constantly being bombarded with messages on how to manage their money: save more for retirement, pay off your loans, balance your budget, refinance your mortgage, save for college, maintain an emergency fund, etc. It's no wonder they're often confused and unable to prioritize their goals. Let's face it — there's only so much money to go around. Advisers and 401(k) plan sponsors need to take a more holistic approach to retirement savings. Yes, salting away 10% of one's annual salary for retirement is laudable, but maybe it's not feasible if that person has to rely on credit card debt to meet monthly household expenses. The bottom line is that retirement planning doesn't stop with drafting a blueprint for investing and amassing a comfortable nest egg. Employers and advisers have to put retirement savings within the context of a family budget — one that makes sense now and in the future.