Nearly Half of All Americans Expect to Retire in Debt

November 18, 2021

Debt can be difficult to manage for anyone, but for retirees living on a fixed income, it can greatly diminish their quality of life. Unfortunately, nearly half of all Americans expect to deal with debt in retirement.

The survey, conducted by the personal finance website MagnifyMoney, found that 46% of Americans expect to still have debt obligations when they retire. This is not necessarily a bad thing, so long as the debt is manageable. The majority of household debt comes from mortgages, which have low-interest rates, and it may make sense to focus on investing sooner and paying off debt later so that the power of compounding can grow your investments for as long as possible. 

Unfortunately, the total debt burden for older Americans has exploded in recent decades. The amount of debt owed by people over 70 has increased 614% since 1999, climbing to $1.27 trillion in 2021, according to data from the Federal Reserve, and many retirees may have trouble keeping up with such a large debt burden.

Not only are Americans worried about entering retirement with debt, but they are also concerned that they will not be able to rely on Social Security. 43% of the survey’s respondents said they fear their retirement plans could be derailed due to Social Security running out.

The survey also found that young people expect to retire early, with nearly 30% of the Gen Z and Millennial respondents saying they want to retire before they turn 50.

Despite fears about debt and Social Security, and hopes to retire early, the survey found that most Americans intend to go it alone when it comes to retirement planning. More than half, 54%, of the respondents that they have no plans to work with a financial planner or retirement specialist.

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