If you are wondering whether you can retire with debt, you are not alone. For many adults 55 and older, the idea of stepping away from work while still making payments feels unsettling. Yet carrying debt into retirement has become increasingly common. Research from the Federal Reserve and the Employee Benefit Research Institute shows that nearly half of Americans over 65 still have some form of debt, and the share of retirees with debt has risen steadily for decades. In 1992, only about 27 percent of retirees carried debt. By 2020, that number had grown to 40 percent. Today, the average debt for households led by someone 65 or older is about $77,000, including mortgages and other loans.
Tamara Rivers, founder and CEO of The Financial Transformation, LLC, has spent more than 17 years helping people prepare for retirement, repair credit, and reduce financial stress. She says the question is not just about whether you can retire with debt, but how you can do it wisely.
The Most Common Debts Retirees Carry
When Tamara works with older adults, she often sees the same kinds of debt patterns repeat. Mortgages top the list, with about one in four retirees still paying for their homes. Credit cards come next, with roughly 15 percent of retirees carrying balances. Auto loans are common too, since many people buy vehicles later in life. A surprising trend is the rise of student loan debt among those over 60, often from co-signing for children or grandchildren. Medical bills and personal loans also show up for many households, especially when health costs strain savings.
According to Tamara, these debts can feel heavy, but what matters most is how you manage them. “Debt does not have to define your retirement,” she explains. “What matters is creating a plan that keeps payments from overwhelming your lifestyle.”
The Risks of Retiring With Debt
The biggest financial risk of retiring with debt is reduced income flexibility. Debt payments cut into what you have available for food, housing, and daily needs. The Transamerica Center for Retirement Studies found that 45 percent of retirees with debt report difficulty covering monthly expenses, compared with just 15 percent of those who are debt-free. High interest rates, especially on credit cards, can quickly erode savings. A $10,000 balance at 18 percent interest costs nearly $1,800 a year in interest alone if it is not paid down.
Debt can also make it harder to respond to emergencies. The Employee Benefit Research Institute has reported that retirees with debt are twice as likely to feel financially insecure when faced with unexpected expenses. And long-term payments increase the chance of drawing down retirement accounts faster, leaving you with fewer assets for the future.
The risks are not only financial. Tamara points out that debt can weigh on your emotional health. Retirees with debt report more stress, more sleep problems, and less confidence in financial decisions. The National Endowment for Financial Education notes that debt often limits lifestyle choices, like traveling or moving closer to family, and can strain relationships. “I see many people who feel ashamed of having debt in retirement,” Tamara shares. “The truth is, it’s far more common than you think, and the key is to face it with a plan.”
Finding Peace of Mind With a Debt Strategy
So can you retire with debt? The answer is yes, if you manage it thoughtfully. Tamara encourages her clients to approach debt with a mindset of control, not fear. “You don’t need to be debt-free to retire well, but you do need to make debt a part of your financial plan,” she says. That might mean refinancing a mortgage to lower monthly payments, consolidating high-interest credit cards, or creating a strict budget that protects your retirement savings from being drained too quickly.
Practical steps include working with a financial coach, exploring programs that lower medical costs, and making intentional choices about spending. Tamara also recommends building even a modest emergency savings fund, because it can keep new debt from piling on when unexpected costs arise.
Your Positive Path Forward
Retiring with debt does not mean giving up on a comfortable or joyful retirement. By facing your numbers honestly, seeking expert guidance, and putting repayment strategies in place, you can reduce stress and enjoy more freedom. The goal is not just financial security but peace of mind.
If you want to explore more about preparing for retirement while managing debt, you can find resources at the Consumer Financial Protection Bureau and through organizations like the Employee Benefit Research Institute. Tamara Rivers also offers workshops and coaching through The Financial Transformation that are tailored to seniors and their unique challenges.
Retirement should be about living on your terms. With the right strategy, even if debt comes along for the ride, it does not have to steer the journey.
About the Expert
Tamara Rivers – Founder & CEO, The Financial Transformation, LLC
Tamara Rivers is a financial educator, coach, and community leader with over 17 years of experience helping individuals achieve financial confidence and independence. As founder and CEO of The Financial Transformation, LLC, and its nonprofit arm, Financial Care Center, Inc., she has guided thousands in improving credit, reducing debt, and preparing for retirement.
Specializing in credit repair, budgeting, and retirement readiness, Tamara offers practical strategies that ease financial stress and build long-term security. She believes financial wellness is about more than numbers; it’s about peace of mind and living life on your terms.
A proud mother of three and published author, Tamara also created the Pink Purse Power™ initiative to inspire women and seniors to pursue financial freedom with confidence.
