What is the most common debt people have in retirement?

The golden years are supposed to be debt-free, a time when you can finally relax after decades of monthly mortgage, student loan and credit card payment obligations. But that vision of retirement is increasingly out of reach for millions of Americans who find themselves carrying substantial debt well into their 60s, 70s and beyond. The financial landscape has shifted dramatically over the past few decades, and unlike previous generations, which widely entered retirement with modest debt balances or none at all, today's retirees are carrying more debt, and more kinds of debt.

Debt levels for Americans under 65 have roughly doubled since the early 1990s, according to the latest Survey of Consumer Finances from the Federal Reserve, largely mirroring inflation. But the rise in debt levels has been far more severe among older adults. For households headed by those aged 65 to 74, average debt has more than quadrupled over the last three decades, climbing from about $10,000 in 1992 to around $45,000 in 2022. For those 75 and older, the increase is even steeper, with a sevenfold jump from under $5,000 to $36,000 during the same period, according to an AARP report.

And these debts aren't just an inconvenience. About 65% of older adults with debt say it's a problem and nearly a third call it a major problem. So what's driving the shift? One type of debt stands out above the rest.

Find out how to get help with your credit card debt in retirement.

What is the most common debt people have in retirement?

Credit card debt is the most common type of debt among adults ages 50 and older, according to Western & Southern Financial Group, a financial services firm. And it remains the dominant and most persistent form of debt carried into retirement. One of the contributing factors to this issue is that, unlike mortgages, auto loans or student loans, which follow predictable payment schedules, credit card debt is revolving and high-interest. It tends to build quietly and steadily, particularly for retirees who are living on fixed incomes and using credit cards to fill in financial gaps.

And that's a pretty common approach for retirees to take in today's economic landscape. Thanks to years of high inflation, the prices of consumer goods have skyrocketed, with housing, food, healthcare and other costs now weighing even more heavily on retirees' budgets. As those costs climb and budgets tighten further, it's surprisingly easy for everyday essentials like groceries, gas, prescriptions and utilities to migrate onto credit cards. Plus, any discretionary expenses, emergency home repairs or large medical bills that arise can help push balances even higher.

Once credit card interest kicks in, especially at today's average rate of over 22%, the debt becomes harder to escape. Even modest balances can snowball quickly at today's APRs, which can hit older adults especially hard after they stop working. Many retirees simply cannot find room in the budget to pay down the principal balance fast enough, turning what might have been manageable short-term debt into a years-long financial strain. And, there are a few other reasons credit card debt has become such a major issue among older adults, including:

• Retirement income that won't keep up with inflation: Millions of retirees rely on Social Security, pensions or savings that don't rise at the pace of everyday costs. Credit fills the gap, but the debt issue compounds over time.
• Rising healthcare expenses: Medicare doesn't cover everything, leaving retirees to pay deductibles, copays, dental work and other expenses that can easily end up on credit cards.
• Longer lifespans: Many retirees help support adult children and maintain larger households than previous generations and today's longer lifespans mean more years of covering both their expenses and those who may depend on them.

Learn more about the debt relief options available to retirees here.

What options do retirees have for unmanageable credit card debt?

Credit card debt is among the hardest to manage in retirement, so if you're a retiree who's struggling under the weight of this type of debt, you may benefit from using one of the following strategies to address it: 

• Consider debt relief. There are numerous debt relief options worth considering, including credit card debt forgiveness, that can help you reduce the total amount you owe on your credit card balances. This can be a lifeline for retirees whose interest charges outpace their ability to pay the debt down.
• Look into credit counseling. A credit counselor can help you build a structured repayment plan that consolidates your unsecured debts into one fixed monthly payment, often with reduced interest rates and fees.
• Work directly with your credit card issuer. Some lenders offer hardship programs that temporarily lower rates or payments, which could be particularly beneficial for retirees with limited incomes.

The bottom line

Retirees today are facing a very different financial reality than generations before them, and credit card debt has become a major problem as a result. This type of debt grows quietly, accelerates quickly and places real strain on already tight budgets, but retirees do have options. Debt relief programs, structured repayment plans and lender hardship programs can all help reduce balances and restore financial control. So, if credit card debt is making retirement more stressful than it should be, taking action now can give you more stability in the years ahead.