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Millennials have a distinct advantage when planning for retirement – the gift of time. Retirement is years away, meaning they can take full advantage of the benefits that years of compounding can have on investment returns and the growth of retirement savings. But it's difficult to plan for retirement while still worrying about paying off college loans. The good news is retirement planning for millennials is easier than it seems and totally doable with a little planning.

Here's how to balance your competing priorities.

Reduce Your Student Loan Payments

If you're unable to make your student loan payments, there are programs that can reduce your payments. Income-based repayment is a plan that bases your loan payments on your income. Use the Department of Education's repayment estimator to find out what your payment options could be. Many of these options only apply to government loans, but there are some private services that allow you to refinance both private and governmental loans as well. As with any type of financial transaction, be sure you understand the costs and terms. Nowadays, a growing number of employers provide assistance to help employees pay off their loans. Check if your company offers this type of help.

Manage Your Spending

You might be in a season of life where it seems like you have a lot of big expenses all at once – buying a car, renting an apartment (which can require a deposit), furnishing your residence and buying a work wardrobe. Not to mention you probably want to have a social life. These expenses can add up. Combined with student loan payments, you could easily find yourself living paycheck to paycheck. We all have choices to make and it's a good idea to get into the habit of tracking your spending and setting a budget for yourself. Tools and money management software can help you organize your finances.

Start Saving for Retirement

If your employer offers a workplace retirement plan like a 401(k) or 403(b), it's a good idea to take advantage of it. Start with a level of contribution you can afford. If your employer offers a match to your contributions, your goal should be to contribute enough to earn a full match as soon as you can. For example, a common match is 50 percent of the money contributed, up to 6 percent of your salary. In this case a contribution of 6 percent of your salary would earn you a 3 percent match from your employer, or an instant 50 percent return on your money. This is free money for you. Even if you start out small, be sure to increase your contribution every year.

You could also consider adopting a built-in automated increase. For example, you might consider an additional 1 percent each year. Remember your 401(k) contributions are taken out of your paycheck before taxes, so you'll also save on the money you owe to Uncle Sam.

Pull It All Together

To pull off effective retirement planning for millennials while also paying off loans, start by establishing a game plan. Look to control spending and stick to an affordable budget. This should provide both financial security now and the confidence to make bigger career and lifestyle choices down the line.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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