Average Debt for Retirees in 2025
The landscape of retirement has changed significantly over the past few decades, with a larger percentage of older Americans carrying debt into their golden years. Several key studies and reports shed light on the current financial reality for retirees and near-retirees in 2025.
Overall debt picture
- Total debt: The Federal Reserve's Survey of Consumer Finances indicates that the average older adult carries a significant amount of debt. For instance, MarketWatch reported that people between 65 and 74 years old owe an average of $134,950. For those aged 75 and older, the average is around $94,620.
- Non-mortgage debt: A January 2025 LendingTree analysis focused on non-mortgage debt among 66- to 71-year-olds in major U.S. metros. The study found that nearly all (97.1%) of these individuals had non-mortgage debt, with a median balance of $11,349.
Common types of retiree debt
- Credit card debt: This is one of the most common forms of debt for retirees. A 2025 AARP survey revealed that nearly half of adults aged 50 and older carry credit card debt, with many using credit cards to cover essential expenses. A CNBC report indicates that nearly half of older adults with a balance owe over $5,000.
- Mortgage debt: While some retirees achieve a mortgage-free retirement, many continue to make home loan payments, which can be a significant burden on a fixed income. According to a Q4 2024 Bankrate report, Baby Boomers (60-78) carry an average mortgage balance of $194,334.
- Auto loans: Auto loans often follow individuals into retirement. The LendingTree analysis found that auto loans accounted for the largest share of non-mortgage debt for retirement-age individuals, making up 33.3% of the median non-mortgage debt.
- Medical debt: A significant portion of older Americans face medical debt despite having health insurance. A Consumer Finance Protection Bureau (CFPB) analysis found that, as of 2020, 7% of adults aged 65 or older had unpaid medical bills, with an average bill of $13,800.
Impact of Debt on Retirement
Carrying debt into retirement can significantly reduce financial flexibility and introduce stress. A fixed income, derived from sources like Social Security or pensions, has less elasticity to handle large or unexpected expenses when a portion is already earmarked for debt payments. This can force retirees to make tough decisions, such as downsizing their lifestyle or, in extreme cases, drawing down their retirement savings prematurely.
Comparison of Debt Repayment Strategies
| Feature | Debt Snowball Method | Debt Avalanche Method |
|---|---|---|
| Principle | Pay off debts with the smallest balance first. | Pay off debts with the highest interest rate first. |
| Psychology | Offers quick wins and builds momentum for paying off debt. | Can be less motivating as it may take longer to eliminate the first debt. |
| Financial Outcome | Can cost more in total interest paid over time, especially with high-rate debts. | Saves the most money in interest charges over the life of the debt. |
| Best For | Individuals who need psychological motivation and early progress to stay on track. | Mathematically minded individuals focused on minimizing total cost. |
Strategies for Managing and Reducing Debt
For those approaching retirement or already in it with debt, strategic financial planning is essential. Here are some steps to consider:
- Prioritize high-interest debt: The debt avalanche method is an effective way to attack high-interest debt, such as credit card balances, first. The savings from interest payments can then be used to tackle other debts.
- Review and restructure mortgage: For a low-interest mortgage, it might be more beneficial to maintain payments while prioritizing high-interest consumer debt. Some retirees with significant home equity may consider a reverse mortgage, but it is important to understand the long-term implications.
- Consider a part-time job: Working part-time in retirement can provide additional income to accelerate debt repayment without significantly impacting retirement savings.
- Budget and cut expenses: Carefully review your retirement budget and identify discretionary expenses that can be reduced. Money saved on dining out, travel, or memberships can be redirected toward debt payments.
- Explore consolidation options: A debt consolidation loan or balance transfer card with a 0% APR period can combine multiple high-interest debts into one lower-interest payment. This can simplify repayment and save money on interest.
Conclusion
The average retiree has a complex financial picture involving multiple types of debt, with a significant proportion carrying mortgages and high-interest credit card balances. The data from 2025 and recent years indicates that retiring debt-free is becoming less common, making effective debt management in retirement more critical than ever. By understanding the common debt types and implementing strategic repayment methods, retirees can navigate these challenges and work toward greater financial security. Proactive steps, whether taken before or during retirement, can lead to increased peace of mind and financial flexibility in the later years of life. For more on debt management, explore resources like the National Council on Aging.
What to do if you have debt
- Assess your financial reality: Get a clear picture of all your debt, including balances and interest rates, as well as your income and assets.
- Envision your retirement: Clarify your retirement goals to determine how debt could impact your lifestyle and prioritize which debts to tackle.
- Choose a repayment strategy: Decide whether the 'debt avalanche' (highest interest first) or 'debt snowball' (smallest balance first) method is right for your financial situation and motivation.
- Explore debt consolidation: Investigate options like a personal loan or 0% APR balance transfer to simplify and potentially lower the interest on your debt payments.
- Build an emergency fund: Establish an emergency fund to cover unexpected expenses, which can prevent you from relying on high-interest credit cards for financial shocks.
FAQs
What is the average debt for a US retiree? The average amount of debt for retirees varies by age group. MarketWatch reported that adults aged 65 to 74 carried an average of $134,950 in debt, while those aged 75 and older had an average of $94,620.
Is it normal for a retiree to have debt? Yes, it is becoming increasingly common. Studies show a significant rise in older households carrying debt. For instance, LendingTree found that nearly 97% of retirement-age Americans have some form of non-mortgage debt.
What is the most common type of debt among retirees? Credit card debt is one of the most widespread forms of debt carried by older adults. A 2025 AARP survey found that nearly half of adults aged 50 and older carried a credit card balance.
What is the average mortgage debt for a retiree? According to Bankrate data from Q4 2024, Baby Boomers (ages 60-78) carry an average mortgage balance of $194,334. Harvard research has also highlighted a substantial increase in median mortgage debt for older homeowners over the past few decades.
What is the best way to get rid of debt on a fixed income? Strategies include prioritizing high-interest debt first (debt avalanche), reducing discretionary expenses through budgeting, and potentially consolidating debts into a lower-interest loan.
Should I use my retirement savings to pay off debt? Most financial experts advise against using retirement funds to pay off debt due to potential taxes, penalties, and the loss of future investment growth. Alternatives like debt consolidation are generally better options.
How can medical debt impact retirees? Medical debt can pose a significant financial barrier, especially for those on a fixed income. A CFPB analysis found that many older adults carry substantial medical debt, and this can lead to making harmful trade-offs, like skipping necessary prescriptions.
