Nearly Half of All Americans Expect to Retire in Debt, Survey Finds

My Comments: I’ve now spent 45+ years of my life helping others figure out solutions to their financial problems. It wasn’t until recently that I’ve focused my attention on this debt problem. I was mostly focused on growing the amount of money they had with which to pay their bills.

Apparently I’m not the only one whose professional skills have not risen to the task. Having said that, I’m today very aware that roughly 87% of all retirees own a home that can be turned into a liquid resource. This represents a way to reduce stress and allow folks to get on with their lives.

It’s a special way to turn what is now an illiquid asset such that they can eliminate some of the debt they face, and to do so without having to make mandatory monthly loan payments.

If any of my readers are questioning my sanity, reach out to me for a better explanation.

By Jessica Dickler \ Nov 16, 2021 \

Most people are used to living with debt. Retiring in the red is another story.

Maintaining enough cash on hand to cover recurring bills with interest is harder on a fixed income and adds another obstacle to the challenge of living comfortably.

And yet, 46% of all Americans expect to retire in debt, according to a survey by personal finance site MagnifyMoney.

“Debt can derail a lot of folks’ retirement plans,” said Ismat Mangla, MagnifyMoney’s executive editor.

These days, older Americans owe more than ever before.

The total debt burden for Americans over age 70 increased 614% through 2021 from 1999, to $1.27 trillion, according to data from the Federal Reserve Bank of New York.

While most Americans recognize it is increasingly their responsibility to fund retirement rather than relying solely on a pension or Social Security, 43% fear their retirement dreams could be disrupted if Social Security runs dry, according to the MagnifyMoney survey.

Already, the U.S. Department of the Treasury has said the Social Security trust fund will run out of money sooner than expected due to the Covid pandemic.

The outlook threatens to shrink retirement payments and increase health-care costs for older Americans.

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, said Shelly-Ann Eweka, senior director of financial planning strategy at TIAA.

It’s likely that retirees will have to factor in some amount of debt repayment, such as a mortgage or auto loan, but since those typically come with relatively low interest rates, “that’s what I’d call manageable debt,” Eweka said.

“Credit card debt has higher rates and it’s easy to get caught,” she added. “The next thing you know, you are struggling.”

Your retirement income — monthly payments from investments and Social Security, for example — should cover debt payments and still afford you a comfortable lifestyle, she said.

Otherwise, you may need to work longer or find a supplemental source of income from a part-time job, Eweka suggested.

Most experts recommend meeting with a financial advisor to determine exactly what your retirement will look like.

There’s also free help available through the National Foundation for Credit Counseling.