BOSTON, MA – A recent survey from the Federal Reserve has revealed that an increasing number of older adults in retirement are burdened by debt. According to the 2022 Survey of Consumer Finances, the percentage of individuals aged 65 to 74 with debt has risen to 65% in 2022 from 50% in 1989. Similarly, those aged 75 and over reporting debt has increased to 53% in 2022 from 21% in 1989.
While limited retirement income presents a significant challenge, there are strategies available to manage debt in later years. It is important to note that not all debt is detrimental. Certain types of debt, such as mortgage debt that earns a tax deduction, may be reasonable to maintain while focusing on other investments to aid in growth.
There are various approaches to tackling debt in retirement. One approach is to consider taking up part-time work to supplement retirement income and pay off remaining debt. Additionally, downsizing to a smaller home or relocating to an area with a lower cost of living can free up financial resources. Timing the claiming of Social Security benefits and judiciously tapping into home equity are other potential strategies for managing debt in retirement.
Consulting a financial professional to determine the best approach for individual circumstances is recommended. These methods offer potential solutions for older adults burdened by debt, empowering them to enjoy a more financially secure retirement.