Smart Ways to Deep-Six Debt in Retirement

Editor’s note: This article is part of our “Debt Free” series, a Next Avenue initiative made possible by a grant from the RRF Foundation for Aging.

As my dad got older, like many people he needed more help managing his finances. Mainly he needed someone to oversee the bills, or remind him which charity he had already sent a check to that year.

But I remember the day I discovered a high-interest credit card he had used to pay some vet bills for his dogs. Turns out he'd gotten a "deal" through the veterinarian's office. They just forgot to mention the 21.99% interest rate.

That sent me on a recon mission through his stack of unopened mail (a warning sign, may I add) for any other types of debt. Sure enough, he had a Visa card through his credit union where he was also carrying a balance, of about $2,200.

Eventually Dad was able to pay off what he owed. But many retirees these days are not so lucky. From credit cards to mortgages and even student loans, a startling percentage of older Americans are carrying debt into their later years: In 2022, 65% of families with a head-of-household aged 65 to 74 were in debt — as well as 53% of families with heads aged 75 or older, according to a report by the Employee Benefits Research Institute.

Obviously, having to meet debt payments in retirement is not ideal, and could compromise your financial stability at a time when you need more peace of mind and security, not less.

Before we dig into the solutions — and there are some — it's important to examine how debt has changed for many older Americans in the last few years.

Although the notion of being "in debt" is fraught with judgement, it's essential to put aside shame and blame and consider the greater economic forces at work here, in order to address the problem individually and on a wider scale.

The "older debt" trend is part of an unprecedented shift in the U.S. economy, where older adults are retiring with fewer assets, facing a higher cost of living and health care expenses, and — let's not forget — much longer life expectancies.

• About 68% of retirees had lingering credit card debt in 2024, a significant jump from just 40% of retirees in 2022, according to a new poll by EBRI.

• The number of Americans aged 75 and up with mortgages has almost tripled since 1998, according to an analysis by the Urban Institute, from 10.9% to 30.1% in 2022.

• Older individuals also owe more on their mortgages now: the median loan amount for those 75 and up rose to $106,800 in 2022, from $66,369 in 1998.

• Even more worrisome: 3.5 million Americans over the age of 60 are holding $125 billion in student loan debt, an increase of more than 500% since 2004, according to a 2024 report by the National Consumer Law Center and the Urban Institute.

It's a perfect storm of financial pressure. So it's not surprising that many people are turning to credit cards and other loans to make ends meet. The trouble is that the burden of debt can become a pernicious cycle that's pretty tough to break once you're on a fixed income.

If I might inject a bit of my own experience here: I'm a debt veteran myself. I've been there, spent that, and had to pay it off doing all kinds of crazy inventive things to achieve financial sanity. I'll spare you the details — it was decades ago — so I can cut to the important part.

There are a number of standard-issue steps you can take to control your debt, or get out of debt entirely. I'll share the traditional methods because these are tried-and-true (I guess), and they do work for some people:

1. Track your spending.

2. Cut back on extraneous expenses like cable and eating out.

3. Make a budget and stick to it.

4. Make a list of your cards using the snowball or the avalanche method.

5. ZZZZZZZZZzzzzzzzz oh, sorry, I fell asleep!

These are all solid money-management skills, and they can help you get out of debt. But eliminating debt and preventing it from creeping back requires some additional skills.

I agree with Next Avenue contributor John Wasik, who wrote about avoiding debt here. The key thing is to set up a debt-free life now, before you retire, and plan ahead — insofar as any of us can — to remain debt free. That means:

• Calculate your retirement income. In order to live within your means when you retire, you need to know what your means are. Luckily, there are resources to help you figure out your future Social Security benefit, as well as income from retirement accounts. Taking this step can help you be realistic about the lifestyle you can afford.

• Enrich your emergency fund. A common reason people fall into debt is that they don't have cash to cover a curveball (or a crisis). If you can't save the recommended three to six months' of expenses, salt away what you can, so that you don't put unexpected expenses on plastic.

• Don't take on high-interest debt, for yourself or anyone else. That means: Avoid co-signing high-interest loans, or even taking out a student loan for an adult child or grandchild — for example, a PLUS loan (Parent Loan for Undergraduate Students).

• Save for stuff you know is coming. The car, the roof, the water heater, your computer(s). They will all need to be repaired or replaced at some point, so make sure you're saving ahead for foreseeable expenses (your emergency fund should cover the ones you can't predict).

There are a number of super useful get-out-of-debt strategies featured in the Next Avenue series, Debt Free. Here are a few I think are particularly effective — they get my Debt Veteran Thumbs Up. And a couple off-road ideas of my own that are worth considering.

• Consider debt consolidation. You have to do your due diligence — and, sadly, look out for scams — but debt consolidation is not hard, and it could lower your monthly payments to a more manageable level. Lots of resources here in Lucy Lazarony's excellent article.

• Downsize. Difficult? Yes. Worth it? Almost certainly. If you need further inspiration, see the data above on older adults with mortgage debt.

• Create an anti-debt playbook for yourself. Debt happens because you spend more money than you have. So: make a list of the people, places and things that suck you into the debt zone. Is it a certain friend or friend group? A beloved shopping site? Someone you care for who is always borrowing? Remember: No is a complete sentence; and your financial security is important.

• Ask your family for help. This is a dicey strategy, and sometimes unwise if money is fraught between family members. But IF you're in a position to ask someone you love for assistance in paying down some or all of your debt — and if they'll accept a modest interest rate — it could be like a low-key debt consolidation strategy.

Is it a headache to get out of debt? Yes. I don't share any of this advice lightly. Getting out of debt and staying there often requires massive changes to your personal habits and expectations. It also takes a determination to be proactive about the expenses you can anticipate, and to live a life you can afford.

If you can do that, then you've removed (or at least reduced) an annoying, fixed monthly payment, never mind the stress that comes with owing. That really is priceless. And not like the MasterCard commercial.

M.P. Dunleavey writes about life and money, as she has for many years, in countless publications (and a book). She now covers aging and eldercare for Next Avenue, Kiplinger and on Squished, a lighthearted chronicle about how to cope with aging parents, young-ish kids and one’s own mortality. Read More