Preparing for the future while being tethered to debt is an increasingly common dilemma for retirement plan participants, especially for those who are paying on student loans, according to a new OneAmerica survey.

Nearly 4 in 10 survey respondents indicated they are paying toward a student loan for themselves or on behalf of someone else. Of those, an astounding 85 percent of respondents paying toward student loans reported that their obligation to repay the funds are impacting their ability to prepare for retirement. Of that group, 38 percent said that student loans are having a "significant impact" on their ability to prepare for retirement.

From Aug. 25, 2017 to Jan. 31, 2018, more than 12,200 OneAmerica retirement plan participants responded to an online poll, sharing their thoughts on financial wellness, education and resource preferences, and potential roadblocks to retirement. The survey results provide insights into how retirement plan sponsors can work with participants to improve their financial wellness and overcome retirement planning hurdles.

"The reality that many participants face when it comes to student loans is tough," said Marsha Whitehead, OneAmerica vice president of enterprise marketing. "These survey results make it clear that retirement plan providers, in partnership with retirement plan sponsors and advisors, are in position to help participants understand the impact student loans can have and the best way to balance current and future financial demands. This is critical to retirement preparation."   

Survey results also showed that women, who already lag men when it comes to retirement preparation, are more likely to be paying toward a student loan than their male counterparts (41 percent compared to 34 percent).

Retirement plan sponsors do recognize the financial impact student loans are having on their employees, with some offering student loan payback programs to assist employees.

While student loan payback programs are a great benefit to help participants gain control of their student loan debt, OneAmerica cautions sponsors not to replace or provide employees the option of applying an employer retirement plan contribution to student loan debt.

"By providing comprehensive financial wellness education, retirement plan sponsors can help participants get control of their financial lives in balancing immediate financial demands while also focusing on retirement preparation," said Melissa Musial, OneAmerica marketing research and data manager. "Participants may also benefit from education on how to prepare future generations for post-secondary educational expenses – for example, 529 tax-advantaged savings plans and preparing early – to break the cycle of student loans impacting retirement outcomes for the future workforce."

"Participants may feel that their immediate financial needs are more pressing than preparing for retirement," said Musial. "Although it is difficult being tied to the past and paying towards debt, participants need to understand how important it is to prepare for the future."

While participants were able to finance their schooling, they will not be able to borrow in order to finance their retirement years, Musial added.