Summary: Carrying debt into retirement can impact savings, increase stress, and limit financial flexibility.

From Yahoo Finance.: 2025-05-31 07:00:00

Debt is a growing issue for older Americans, with over 97% of adults aged 66 to 71 carrying non-mortgage debt, and a median balance of $11,349 in major cities. This financial strain leads to delayed retirement, premature savings depletion, and increased stress.

A National Debt Relief survey found that 67% of non-retired respondents lack enough savings to live comfortably in retirement, needing an average of 12 more years to reach their goals. Debt affects millions of older Americans, impacting their ability to build a secure financial future and retire comfortably.

Carrying debt can hinder retirement savings, with 49% of respondents having less than $20,000 saved and 22% saving nothing. Entrepreneur Bert Hofhuis warns that debt can erode years of savings, diverting income towards repayments instead of needs or experiences in retirement.

Debt can force retirees to withdraw aggressively from their accounts during market dips, shortening the lifespan of their portfolios. Hofhuis cautions against making hasty financial decisions due to debt obligations that remain constant even during market downturns.

Retirees with debt may feel constrained in their spending habits, becoming more price-conscious and cautious with savings. Debt can create financial tightness, leading to underspending or selling assets to meet obligations, impacting one’s ability to relax and enjoy retirement.

Carrying debt into retirement limits flexibility in adapting to unforeseen expenses like healthcare or home repairs. Hofhuis emphasizes the importance of having room to maneuver financially when unexpected costs arise, highlighting the constraints debt can impose on retirees.

Debt carries emotional burdens, often causing shame and stress for retirees. Hidden balances can affect overall well-being and limit options in emergency situations, underscoring the need to address debt before retirement for a more secure financial future.



Read more at Yahoo Finance.: 5 Reasons You Should Pay Off All Debts Before Retirement If You Can