Rising rents and increasing student loan debt have pushed the retirement age to 75 for college graduates, according to a new NerdWallet study. That’s an increase from NerdWallet’s last analysis, which used 2012 data and predicted an average retirement age of 73 for the Class of 2013.

Compared to the current average retirement age of 62 ^[1], today’s college graduates will work 13 years longer. And, with an average life expectancy of 84 ^[2], they’ll spend only 9 years in retirement.

NerdWallet’s research is based on a 23-year-old new graduate earning the current median starting salary of $45,478 ^[3].

• Average student loan debt: $35,051 ^[4]
• Student loan repayment plan: 10 years
• Average yearly loan payment: $4,239

Two major factors are hurting the ability of millennials to save early on, which will force them to work longer.

Increasing student loan debt: The average student loan debt is now $35,051, up more than $5,500 from 2012, when it was $29,400 ^[5]. This translates into larger monthly student loan payments, diverting money that could otherwise go into retirement accounts. The difference in monthly payment is more than $60 ($353 today versus $289 in 2012).

“The student loan crisis is not only affecting new graduates’ immediate financial situation, it’s making their retirement prospects dwindle,” says Kyle Ramsay, investing manager at NerdWallet. “Based on our findings, higher loan payments have the potential to reduce nest eggs by 32%. That’s nearly $700,000 in this scenario.

“The two most important things millennials can do is save more and save early,” Ramsay says. “Compound interest is a powerful force that can build a comfortable nest egg. For example, if a 23-year-old invests $10,000 at a 6% return today, it could be worth twice that amount by the time he is 35 years old and 20 times that by the time he is 75.”

* If student loan payments were invested over 10 years at 6% return, compounded to age 75.

Rising rents: According to research from Zillow, rents are up 11% nationally since 2012 ^[6].

“Graduates are being forced to shell out more money,” says Ramsay, and that means less going into savings. “This puts them in a tough position because not only are they unable to save early, but they’re losing out on earning interest on those savings.”

A delay in homeownership is also slowing millennials’ ability to build assets, with buyers now purchasing a first home at the median age of 33 ^[7].

When millennials do find the money to save, they’re all too likely to keep their money on the sidelines. According to research from State Street, millennials have an average of 40% ^[8] of their saved money in cash: checking and savings accounts, and term deposits such as CDs.

Missing out on investment returns — even the semi-conservative 6% annual return used in NerdWallet’s analysis — for that portion of their portfolio could cost more than $300,000 (22% of the retirement savings they could have built with a better investment mix).

Millennials frequently report a distrust of investing and stocks, in part because they’ve lived through so much market turbulence, says Daniel Sheehan, a certified financial planner on NerdWallet’s Ask an Advisor platform. “On top of that, many have college loan debt and want to be sure they have funds to make the payments due each month while leading a life that they desire now,” Sheehan says.

“My advice to millennials I speak with is to realize that throughout the history of the investment markets, there have always been traumas,” Sheehan says. “For those who invest wisely — allowing the market time to do its work by compounding — there isn’t a better way to invest for their future than the stock market.”

Millennials have one huge factor on their side: Time, which will allow their money to grow with compound interest over the 40 to 50 years they have until retirement. To use that time wisely, they need to increase their savings rate from the median 6% ^[9] where it now sits. Based on NerdWallet’s calculations, small increases make a big impact:

• A 23-year-old who begins saving 10% today can shave five years off retirement age, amassing enough to leave work at 70. Saving 4% more per year amounts to $2,000 on a $50,000 salary; that’s about $165 a month.
• If a 23-year-old can save 15%, it will pay off with a 10-year difference, bringing retirement age down to 65.
• Someone who hits it out of the park and saves 20% or more could retire as early as age 62, today’s average retirement age.

As new grads get started on their careers, they should keep these takeaways in mind:

Living at home pays off: One big way to save is by living at home after graduation. By NerdWallet’s calculations, those who live at home until age 25 could be rewarded with a retirement that comes five years earlier, at age 70.

Maximizing employer’s matching dollars makes sense: Savers should first contribute enough to their 401(k) to grab all matching dollars offered by their employer, then direct contributions to a Roth or traditional IRA, which generally has lower expenses and a wider range of investment options. (Here’s NerdWallet’s list of best IRA account providers.) If they’re able to max out the IRA, then they should go back to making 401(k) contributions until its annual limit is reached.

Appropriate asset allocation is key: NerdWallet recommends an emergency fund of three to six months' worth of living expenses. Once that fund is established, an investment portfolio with 40% cash will not provide the kind of return that most people in this age group need to meet their retirement goals. And with retirement a long way off, new graduates can tolerate the ups and downs of the stock market. Most experts would suggest that a 23-year-old invest 80% to 90% of retirement funds in a well-diversified stock portfolio.

Help is available: Many people would benefit from working with a financial advisor to develop a plan to save for retirement; however, that option isn’t in the budget of many millennials. Consumers can always manage their own portfolios and avoid management fees. For those who want a more hands-off approach, robo-advisors are an inexpensive way to get professional investment management. These services manage investor portfolios through computer algorithms, at a fraction of what a human financial advisor might charge.

NerdWallet’s calculations are based on a 23-year-old new college graduate, earning the median starting salary of $45,478 per year with $35,051 in student loan debt.

Rent increases have averaged 11% nationally since 2012.

Calculations assume a conservative 6% investment return and a 6% savings rate (the current median for millennials).

Calculations also assume a 50% employer 401(k) match up to 6%, and 3% annual wage increases to account for inflation and salary growth.

The required amount to retire is assumed to be 80% of final working-year income, less Social Security income, for a life expectancy of 84. In our base case at 75, this is 80% of projected final-year income of $211,513, minus projected Social Security income of $33,482, yielding a replacement annual income of $135,728 in the first year of retirement. Taking into account Social Security income rising during the 9 years of retirement, you will need a $1.189 million nest egg.

[1] According to a 2014 Gallup survey, U.S. retirees report retiring at an average age of 62. The most popular age at which to claim Social Security benefits is 62, according to an analysis of Social Security Administration data by The Center for Retirement Research at Boston College.

[2] Age 84 is the average of the Social Security Administration’s life expectancy estimates for current 23-year-old men and women (age 86 for women, age 82 for men).

[3] The National Association of Colleges and Employers reports that the median starting salary for the class of 2014 was $45,478. Class of 2015 starting salaries have not yet been released.

[4] The average student loan debt carried by students graduating in the class of 2015, as calculated by Mark Kantrowitz, publisher of Edvisors.com.

[5] Students in the class of 2012 graduated with an average of $29,400 in student loan debt per borrower, according to the Institute for College Access & Success.

[6] Zillow data shows that rent prices rose 11% nationally between January 2012, when prices averaged $1,227, and March 2015, when prices hit $1,362.

[7] The average first-time homebuyer is 33, according to a Zillow analysis in August 2015.

[8] A State Street survey published in May 2014 found that millennials have 40% of their investable assets allocated to cash.

[9] In T. Rowe Price’s 2015 Retirement Spending & Saving Study, millennial workers who were expecting to contribute to their 401(k) plan reported a median 6% deferral rate.