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Retirees Burdened with Debt: What’s the Most Common?

McNair Dallas Law

Talk to just about any financial adviser, and they will urge you to enter retirement without debt.  However, while a goal of beginning your golden years in the black is laudable, the reality can be very different.

A recent survey of about 2,000 American retirees between the ages of 62 and 75 found many of them burdened with debt.

Some likely ran out of time to pay off their debts before retiring. Others may have entered the red or simply deepened their debt level after leaving work.

Money Talks News’ recent article entitled “This Is the Most Common Debt Among Retirees — by Far” provides the most common type of debt retirees report — along with other debts that are part of retirement for many people.

  1. Credit card debt. Over 40% of retirees were paying down credit card debt in 2022 . High interest rates and fees make credit cards difficult to pay off, especially if you don’t have a regular paycheck to help you pay bills.  If you can’t pay it off, you may spend your retirement burdened with debt.
  2. Mortgage. Over 30% of retirees admit they are still paying off their mortgage in retirement.  A home loan is one of the few types of borrowing that can be classified as “good debt.” Many experts suggest paying off a mortgage before retirement, but others argue against such a strategy.
  3. Auto loans. Over 20% of retirees said they owed money on their car in 2022.  Unless you’re driving a reliable old clunker, or are willing to part with some of your nest egg, an auto loan is hard to avoid, retired or not. As a result, about a quarter of retirees still are paying off this type of loan.

Retirees said they were also burdened with debt in 2022 in these categories:

  • Medical debt: 11%
  • Home equity loan: 7%
  • Student loan: 4%
  • Business loan: 1%

Researchers also revealed that many retirees are burdened with more than one type of debt, and the number of people faced with catastrophic medical debt is on the rise.

Reference: Money Talks News  (Jan. 9, 2023) “This Is the Most Common Debt Among Retirees — by Far”

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