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Getting Out of Debt is a Worthwhile Goal, Yet Survey Finds Almost Half of Americans Expect to Retire Owing Money

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“Getting debt-free” has become a common financial mantra. As the years go by and we age toward eventual retirement, the common wisdom has traditionally suggested that we will pay off more and more debt, then step blissfully into our retirement years financially free and unencumbered. But as it turns out, that “common wisdom” of retiring without debt is less and less common. Writing in this recent article from the CNBC website, reporter Jessica Dickler cites recent data that nearly half of all Americans fully expect to retire in debt.

Retiring in the Red Can Upend Financial Plans

“Most people are used to living with debt,” Dickler states. “Retiring in the red is another story.” According to personal finance website MagnifyMoney, 46 percent of Americans expect to retire in debt, a sobering statistic considering how many retirees dream of a debt-free life. Paying bills is tough enough on a fixed income without throwing paying off debt into the mix and having enough left over to live comfortably. Thanks to a variety of factors, the percentage of Americans in debt—and the amount of debt we owe—is higher than ever before. This can have a significant dampening effect on a person’s retirement dreams. 

Adults 60 and Older Carry $3 Trillion-Plus in Debt

By now, most Americans should realize that they can’t rely solely on pensions or Social Security to fund their retirement years anymore. Most understand that they need to provide at least some of their own funds to afford a comfortable retirement, and yet 43 percent still fear a major disruption to their goals if Social Security runs out, says the CNBC analysis. As the Department of the Treasury has already reported, the COVID pandemic has depleted the Social Security trust fund significantly, increasing the risk of smaller retirement payments and rising health-care costs for retirees.

Dickler writes, “The total debt burden for Americans over age 70 increased 614 percent through 2021 from 1999, to $1.27 trillion, according to data from the Federal Reserve Bank of New York.” Among those approaching retirement age, or just entering retirement – adults between 60 and 69 – total debt now tops $2 trillion, of which roughly 75 percent is mortgage debt. Auto loans and credit card debt are a distant #2 and #3, followed by student loans, home equity loans, and other miscellaneous categories of borrowing.

All of this adds up to a rather bleak financial landscape for those struggling to divest themselves of debt before they retire. But it’s not all bad news.

Some Retirement Debt May Be Manageable

Shelly-Ann Eweka, financial planning strategist at TIAA, told Dickler, “Carrying some debt in retirement isn’t necessarily bad if those debt payment plans don’t put a huge financial strain on your retirement income.” These days, budgeting for some debt repayment—such as mortgages or auto loans—may be a bit of a given for more and more seniors.

Thanks to the low interest rates of auto loans and mortgages, Eweka says, “That’s what I’d call manageable debt. Credit card debt has higher rates and it’s easy to get caught. The next thing you know, you are struggling.”

Make Sure Income Covers Debt Comfortably

When putting together a budget after retirement, it’s important to make sure that whatever money you have coming in, either from investments or Social Security or even a part-time job, should cover all of your expenses including debt payments with enough left over for your creature comforts. If that doesn’t seem possible when you crunch the numbers, you may have to consider working longer to make sure you can cover basic needs and wants.

If any of this seems overwhelming, don’t panic; there are options for approaching this as wisely as possible. Meeting with a financial advisor is always a great idea so that you can run your retirement plan past an expert who can point out the potential pitfalls. The National Foundation for Credit Counseling offers free resources, as well.

Rajiv Nagaich: You Need a Financial Dashboard

Here at AgingOptions, Rajiv Nagaich takes a more strategic view. “In my opinion, focusing simply on debt is the wrong question,” he argues. “The real question is, are you financially prepared for everything retirement can throw at you? That’s why I say, sit down with a qualified financial planner and have them prepare what we refer to as a financial dashboard. It’s the only way you can gauge your full financial picture and make all your money decisions with a long-term, strategic approach.” Contact us here at AgingOptions and we’ll gladly refer you to a professional who will guide you in this vitally important step.

My Life, My Plan, My Way: Get Started on the Path to Retirement Success

At AgingOptions we believe the key to a secure retirement is the right retirement plan – yet statistics show that 70 percent of retirement plans fail. That’s why for nearly two decades we’ve been dedicated to the proposition that a carefully-crafted, fully comprehensive retirement plan is the best answer to virtually any contingency life may throw your way as you age.  Our slogan says it all: My Life, My Plan, My Way.

When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age?

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

(originally reported at

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