debt in retirement

Average Retirement Debt for Older Americans is Higher than Ever Before

What to Do if You Fear Your Debt Will Get in the Way of Your Retirement Plans

When it comes to retirement, the most common worry among workers tends to be whether they’re saving enough. However, with new reports showing that the average retirement debt is on the rise, many workers nearing retirement have an added concern to consider. According to the Federal Reserve Bank, Baby Boomers are carrying more debt into retirement than ever before.

Debt is often a serious source of contention and stress and carrying debt into retirement could be quite detrimental to achieving retirement dreams and goals. It can affect a retiree’s ability to pay necessary living expenses, keep their home, and even influence whether or not they can afford independent- or assisted-living facilities, should their health prevent them from living alone.

If you’re concerned about bringing debt with you into retirement, here’s how to tackle it ahead of time so that your retirement dreams can become your retirement reality.

Retirement Debt by the Numbers 

The data referenced above from the Federal Reserve Bank shows that the total debt burden for older Americans has increased dramatically, especially for the time period between 1999 and 2019. In that time, debt levels have risen by 471% for those in their 60s and a whopping 543% for those over 70. While other age groups have also seen significant increases in debt levels, the increases for older Americans are especially pronounced. 

The Boston College Center for Retirement Research reported in an earlier survey that 8 in 10 middle-income Boomers currently have some level of debt. The report also showed that a quarter of Boomers surveyed recorded having more than 20 years remaining on their mortgages, and 3 in 10 reported that they devote more than 40% of their monthly income to paying off debt. While more than half claimed that they intend to retire debt-free, the reality is that only one-quarter of retired Boomers are actually able to do so.

Here’s the breakdown of average debt by age, as reported by the Federal Reserve:

  • Ages 18-23: $9,593
  • Ages 24-39: $78,396
  • Ages 40-55: $135,841
  • Ages 56-74: $96,984
  • 75 and older: $40,925

It’s easy to see how these levels of debt could negatively impact a retiree’s standard of living, even requiring more working years than originally planned.

Why Debt is Increasing

You may be thinking that debt levels are increasing simply as a result of poor choices, such as racking up credit card debt, but the data tells a different story. The primary sources of debt in retirement can be attributed to homes, education, and medical bills.

Mortgage Payments

The consistent increase in real estate prices and the longer-term mortgages that accompany home purchases today mean that seniors are often still making monthly mortgage payments even after they retire.

Student Loans

Often, when we think of student loan debt, we think of Millennials. However, a recent report released by the Government Accountability Office showed that Boomers are the fastest-growing group with student loan debt. This means that there is a significant group of retirees who are still paying off their student loans – or those taken out for their children – well into retirement.

Medical Bills

While most retirees depend on Medicare to cover their medical expenses, Medicare coverage can be restrictive and limiting. It doesn’t cover every medical expense or procedure, leaving a large portion of the retired population with thousands of dollars’ worth of unexpected – and unplanned – medical bills.

Here is a rough breakdown of debt by category for people between the ages of 40 and 69:

  • Auto Loans: $5,000
  • Credit Cards: $4,000
  • HELOC: $2,000
  • Mortgage: $47,000
  • Student Loans: $4,000
  • Other: $2,000

So, How Worried Should You Be?

As previously mentioned, dealing with debt can cause an incredible amount of stress. This is especially true if you’re making debt payments on a fixed income and you cannot generate new income – a scenario many retirees face. Getting ahead, or even simply living comfortably, can be difficult to achieve with a burden of debt on your shoulders.

If you’re still working and a significant amount of your income is directed toward debt payments, rather than being used to solidify retirement savings or pay for living expenses, you could be at risk of your debt consuming your retirement dreams.

SEE ALSO: Retirement Planning in A Volatile Market


Additionally, carrying large amounts of debt could seriously impact your credit score in a detrimental way. This could cause challenges when it comes time to apply for independent- and assisted-living facilities, where credit checks are a typical part of the application process. Even if approved, having to pay off debt might make it impossible to afford such a facility, as adult care facilities often cost tens of thousands of dollars per year, depending on the level of care you need.

Steps You Can Take to Tackle Debt in Retirement 

If you find yourself retired or nearing retirement with a debt load that makes you nervous, there are steps you can take to ensure that your debt doesn’t destroy your retirement plans:

  1. The best way to reduce your debt balance is to stop adding to it. While this isn’t always possible, a good way to lower your temptation to use credit cards is to remove them from your wallet and keep them “hidden” somewhere else.
  2. Make a list of all of your debts and prioritize paying off those with the highest interest rates first, or use the snowball method and pay off your smallest balances first.
  3. Don’t Worry About Your Mortgage. While entering retirement mortgage-free is a goal for most people, it’s likely that the interest rate on your mortgage is a quarter of the rate charged by credit card companies. Additionally, credit card interest isn’t tax-deductible like your mortgage is. So, try to worry a little less about paying off your house and focus on your credit card and other high-interest debts first.
  4. If you really do want to tackle your mortgage debt, it might seem scary to increase the size of your loan. However, since your mortgage interest rate is likely much lower than what you’re paying on other loans, it might behoove you to consider cash-out refinancing on your mortgage. You can then use that cash to pay off your credit cards and other expensive debt and ultimately come out ahead, even with a larger mortgage.
  5. Transfer Your Debt. It may benefit you to take advantage of low introductory credit card balance transfers. Some credit card companies will allow you to transfer higher-rate balances to a new card and get zero percent interest for a year. If you do this, make sure you have a plan to pay off the balance during that interest-free period, otherwise, you run the risk of compounding your problems by running up new charges on the old account.
  6. Work Longer. While it may not be ideal, consider working longer or getting a part-time job to help you lower your debt. Each year you continue working is another year that your retirement nest egg can grow – and more income that can ultimately be used to pay off those debt balances.
  7. Pay on Time. It is essential to pay your bills on time. Late payments result in fees that will only increase your debt balance and hurt your credit score. If you think you might start falling behind on payments, talk to your creditors about hardship or forbearance options.
  8. Put Medical Expenses on a Payment Plan. If you can, try not to charge medical expenses to credit cards unless you have a feasible plan for paying them off. Talk to your medical providers about assistance plans to help you pay your bills. Try to avoid in-office financing through doctors, dentists, and other medical providers, however, as it can often be more expensive in the long run than personal loans.
  9. Establish an Emergency Fund. This can be especially difficult to do when you’re focusing on paying down debt, but having an emergency fund can help you avoid tapping credit cards should unexpected expenses come up.
  10. Reduce Your Expenses. Create a budget and stick to it. Work on reducing any unnecessary living expenses by creating a conservative budget to live within your means.

SEE ALSO: Ways to Reduce Your Household Expenses


  1. Practice Saying No. While it might be difficult to say no to loved ones who need your help, be sure to think twice before doing things such as co-signing loans or going further into debt to help adult children or grandchildren. It might feel good to help in the moment but, by doing so, you risk putting yourself in an insecure financial situation.
  2. Ask for Help. If you’re seriously struggling to meet your financial obligations, try contacting a non-profit credit counseling service. They can help you develop a personalized plan to deal with your current financial situation and get you back on firm financial footing.
  3. Retain Your Savings. It may be tempting to cash out your 401(k) and other retirement accounts to pay off your debt, but try to avoid this. For starters, if you’re under the age 59½, you’ll be charged an additional 10% penalty in addition to income taxes for any withdrawals from 401(k) and traditional IRA accounts. Furthermore, taking large distributions from a qualified plan could result in you landing yourself into a higher tax bracket, which could ultimately hurt you.


Final Thoughts on Debt in Retirement

For most Americans, accumulating debt is an inevitable part of life, so it’s nothing to be ashamed of. Of course, if your earning years are behind you – or they’ll be ending soon – you’ll need a plan. The sooner you develop a strategy for dealing with your debt, the easier it will be to tackle and the likelier you are to achieve the retirement of your dreams. If you’re in need of motivation or you’re unsure where to begin, try the NewRetirement retirement planner to see what your future finances will look like both with and without debt.

Here at Peak Financial Freedom Group, our number one priority is helping you achieve the dream retirement you deserve. If you’d like professional assistance establishing a plan that acknowledges your debt and looks to your future retirement dreams, consider scheduling a meeting with one of our financial advisors today.

This information is provided and intended to be used for general educational and informational purposes only and is not intended as a solicitation for you to buy or sell any financial product. This information is not mean to be relied upon as actual financial or tax advice. The ideas, thoughts, and strategies presented here are those of the Management Team and provide an insight to our views at Peak Financial Freedom Group, LLC and its affiliates. None of this information is intended to give you specific tax, investment, real estate, legal, estate, or financial advice. The planning and ideas in this data are not suitable for all individuals or situations. Consult a qualified financial professional before making any investment decision.

All research information provided is public source material. This material may also include additional references to articles, news, commentary, opinions, viewpoints, analyses, and other information developed by Peak Financial Freedom Group and/or affiliated and/or unaffiliated third parties, which is subject to change at any time without notice. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Peak Financial Freedom Group and its affiliates are not responsible for errors or omissions in the material and do not necessarily approve of or endorsed the information provided. This information is provided “as is” and no party makes any representations or warranties of any kind either express or implied, with respect to this information. Peak Financial Freedom Group, LLC and its affiliates do not warrant the information provided to be correct, complete, accurate or timely, and is not responsible for any errors or omissions in the information or any investment decisions, damages, or other losses resulting from, or related to, use of said information. The ideas, thoughts, and strategies presented here are those of our management teams and provide an insight into our views on Peak Financial Freedom Group, LLC, and its affiliates. Every detail presented here is subject to change without notice at any time.

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661


All of the information presented here is provided and intended to be used for general educational and informational purposes only and is not intended as a solicitation for you to buy or sell any financial product. None of the information presented is intended to give you specific tax, investment, real estate, legal, estate, or financial advice but rather to serve as an educational platform to deliver information. The ideas, thoughts, and strategies presented here are those of the Management Team and provide an insight to our views on Peak Financial Freedom Group, LLC. Every detail in this website is subject to change without notice. Seminar, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC.

2nd Opinion Package available to Qualified Retirees and Soon-To-Be-Retirees may include free consultations, a free retirement income plan, risk analysis, and fee analysis. In addition, a comprehensive written retirement income plan may be provided to those who complete the entire process. Qualified Retirees and Soon-To-Be Retirees must have a minimum of $1,000,000 of investible assets such as IRA’s, 401K’s from past employers, stocks, bonds, mutual funds, bank accounts, money markets, CD’s, etc., but DOES NOT include real estate, businesses, limited partnerships, 401K/retirement plans that can’t be moved to another plan, and other illiquid type assets.

All investments involve risk, can involve the loss of principal, and unless otherwise stated, are not guaranteed. Past performance is no indication of future performance and such information cannot be relied upon regarding future potential gains. Nothing is directly or indirectly guaranteed by this information. The planning and ideas presented herein are not suitable for all individuals or situations. Hypothetical examples are used to explain concepts and are not indicative of potential results you could receive; past performance is not a guarantee of future results; and results are not indicative of any particular investment or income tax situation; your results will be different and could be lower or higher. Consult your financial professional before making any investment decision. Insurance product features and benefits, such as guaranteed lifetime income riders, are subject to contract terms, limitations, fees, and the claims paying ability of the insurance company issuing the contract. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of any other asset including an annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. Different assets can be complex and carry fees, costs, and surrender charges. If you place assets under management with Fiduciary Solutions
LLC, we are paid an advisory fee from Fiduciary Solutions LLC and if you purchase an annuity through us, we are paid commissions from an insurance company.

2019(1), 2020(2), 2021(3), and 2022(4) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019, 2020, 2021, and 2022 Five Star Wealth Manager Awards. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Once awarded, wealth managers may purchase additional profile ad space or promotional products. Award does not evaluate the quality of services provided to clients. The Five Star award is not indicative of the wealth manager’s future performance. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. Award winners represent an exclusive group of wealth managers who have demonstrated excellence in their field by satisfying 10 objective selection criteria. For additional information on the Five Star award, including a complete list of the 10 objective selection criteria and their research/selection methodology, go to

Investment advisory services are offered through Fiduciary Solutions, LLC, a California Registered Investment Advisor. Insurance products and services are offered through PFFG Insurance Agency LLC, a licensed insurance agency (CA Insurance License #0N14013). Peak Financial Freedom Group LLC is a financial planning and umbrella marketing organization, which enables the provision of multiple financial services under one brand. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are affiliated entities with common ownership and control.

Jim Files is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD #1620449) and is a licensed insurance producer with PFFG Insurance Agency LLC (CA Insurance License #0F06511). Dan Ahmad is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1491561) and is a licensed insurance producer with PFFG Insurance Agency LLC (CA Insurance License #0732913).

© 2020 Peak Financial Freedom Group