The Majority Aim To Do So, But Less Than 25% Succeed
Retirement is supposed to be the moment you finally stop stressing about money, right? Unfortunately, for most Americans, that’s not the case. According to a study from the Boston College Center for Retirement Research, eight in 10 middle-income Baby Boomers are still grappling with some form of debt. Moreover, nearly 30% of these retirees allocate over 40% of their monthly income to debt payments.
Even though more than half of Boomers plan to retire debt-free, the numbers tell a different story. A survey by the Employee Benefit Research Institute (EBRI) reveals that only 23% of retirees aged 65 to 74 achieve that goal. Among those 75 and older, the percentage is slightly better at 46%, but that still means more than half of retirees in this age group carry some form of debt.
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A Growing Trend: Debt in Retirement
The increase in debt among retirees isn’t new – it’s been building for decades. For instance:
• In 1989, just 58% of older households had debt. By 2016, that number had jumped to 71%.
• Households led by individuals 65 and older saw their debt rise from 41.5% in 1992 to 60% in 2016.
• The percentage of those aged 75 and up with debt has climbed from 21% in 1989 to 53% in 2022.
These numbers show a significant shift in how retirees manage their finances. While not all debt is “bad” – a manageable mortgage, for example – the prevalence of high-interest debt, such as credit cards, is a major concern.
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Why Are Retirees Still in Debt?
So, what’s driving this trend? Several key factors are at play:
• Rising Costs: Healthcare, housing and basic living expenses have skyrocketed, leaving many retirees to lean on credit to make ends meet.
• Insufficient Savings: Numerous studies have shown that many retirees don’t have enough savings to sustain their desired lifestyle. The National Council On Aging reports that 80% of households with older adults are either financially struggling or at risk of falling into economic insecurity.
• Extended Mortgages: Unlike previous generations, many retirees still have mortgages into their 70s and beyond, which adds significant financial strain.
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