Baby Boomers Are Drowning in 3 Types of Debt: How They Can Pay It Off in 2024
Written by
Heather Taylor
Edited by
Chris Cluff
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Many Americans started 2024 in debt. Key findings from a November 2023 GOBankingRates survey revealed 42% of Americans said they would be in debt. When breaking down the ages surveyed, nearly 46% of Americans ages 55 to 64 said they were in debt, along with 31% of those ages 65 and over.
Despite carrying debt into the new year, 22% of Americans said getting out of debt is their top financial goal for 2024. GOBankingRates spoke to several financial professionals to identify which types of debt boomers have and some of the ways they can pay off this debt.
Mortgage Debt
Wouldn’t most baby boomers be done paying off their mortgages by the time they’re able to retire? Not always. Frank Legan, partner and financial advisor at Cedar Brook Group, told GOBankingRates that boomers may have this debt for strategic reasons.
“When mortgage rates were at all-time lows, they were savvy and took advantage,” he said. “These rates didn’t exist during their adult years prior to the global financial crisis.”
Baby boomers who want to pay off their mortgages this year are recommended by Legan to commit to wiping it out. The longer this generation carries mortgage debt, the lower the margin for error becomes.
Credit Card Debt
Many baby boomers find themselves getting into credit card debt and staying there for a few reasons.
CFP William Bevins said one reason includes high interest rates. The higher the interest, the more it can lead to larger balances and longer payoff windows.
Another issue is falling into the trap of making minimum monthly payments. Doing so, Bevins said, extends the repayment periods and increases the overall debt held by boomers.
Two recommended approaches for paying off credit card debt are the snowball and avalanche methods. Snowball is the approach where you pay off credit cards with the smallest balances first and work your way up, or snowball, to cards with larger balances. With the avalanche approach, cardholders pay off credit cards with the highest interest rates first and work their way down to the smallest.
Student Loan Debt
It’s not uncommon to hear about baby boomers having student loan debt obligations. Some might have co-signed loans for their children or grandchildren.
Mike Hunsberger, CFP and owner of Next Mission Financial Planning, said families that didn’t save enough money for education may have turned to Parent PLUS loans for assistance. Due to the nearly unlimited borrowing capacity of these loans, having and owing staggering balances of $100,000 or more puts many boomers in the position where they cannot retire.
In terms of how boomers can pay off student loans in 2024, options are somewhat limited. Borrowers can utilize repayment approaches such as snowball, enroll in autopay (if you’re not already in it) or work side hustles to put some extra money toward balances.
Hunsberger said, “The real key is to understand what the ultimate costs will be when helping their children find a college in the first place.”
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