Retirees often bring debt into retirement.
Nobody likes being in debt.
Even so, it is hard not to take on debt at some point in adulthood.
People often need to take out loans to purchase a house, start a business, or attend college.
According to a recent Money Talks News article titled “This Is the Most Common Debt Among Retirees — by Far,” it is best to pay off debt prior to retirement.
Many people are still making payments to banks or creditors after they have left the workforce, according to a recent survey of approximately 2,000 Americans retirees between age 62 and 75.
The reasons for debt vary person to person.
Some simply were unable to pay down their debts prior to retirement.
Others took on more debt after leaving the workforce.
What are the most common types of debt for retirees?
Credit card debt.
People still use credit cards in retirement.
In 2022, 40 percent or retirees reported having credit card debt.
In 2020, 42 percent reported this type of debt.
Without a regular paycheck, the expensive nature of credit care debt can be daunting,
A home is one of the greatest investments people make.
Often people carry mortgage payments into retirement.
In 2022, 30 percent of survey respondents said they have this type of debt after retirement.
Because a mortgage is considered “good debt” by many, there is conflicting advice about prioritizing paying off a mortgage prior to retirement.
Although no longer commuting to work, retirees still need to run errands.
It is common to owe money on an auto loan, if you do not have a ton of money saved.
In 2022, 23 percent of surveyed retirees reported having this type of debt.
In 2020, about 30 percent reported auto loan debt in retirement.
Other common debts reported in retirement include medical debt at 11 percent, home equity loans at 7 percent, student loans at 4 percent, and business loans at 1 percent.
Although it is not uncommon to have debt in retirement, it is wise to have a plan for payments or to become debt free.
Reference: Money Talks News (Jan. 9, 2023) “This Is the Most Common Debt Among Retirees — by Far”