More and more Americans are carrying debt into their golden years. Over 70 percent of U.S. seniors ages 65 to 74 carry some level of debt — up from almost 52 percent in 1998 — according to a recent study from the Employee Benefit Research Institute. In families headed by people ages 55 to 64, over 77 percent have debt, and in families headed by seniors ages 75 and older, almost 50 percent had debt.
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The average amount of debt carried by families with heads ages 55 to 64 is $108,011, and the majority of that is comprised of housing debt. Among those with debt, families with heads ages 75 and older owe an average of $36,757. Families headed by someone ages 65 to 74 owe an average of $65,686.
It would be wise not to rely on Social Security benefits, which start as early as age 62, for significant financial relief: The average monthly Social Security payment is $1,404, a modest amount considering seniors are using the money to cover living expenses and repay their mortgages, and still need to set aside money to cover unexpected medical expenses and crucial home repairs.
Avoid Entering Retirement With Debt
Debts of any kind and at any stage in life can ruin your financial health. To enter retirement debt-free and make the most of your golden years, try making some life adjustments. If you can comfortably live in your current home for the foreseeable future, consider refinancing your mortgage to take advantage of better rates.
For seniors carrying a hefty mortgage, consider downsizing and moving to cities like Augusta, Ga.; Winston-Salem, N.C.; or Tampa, Fla. A recent GOBankingRates survey found these cities to be among the 50 cheapest places to retire. Retirees can make their savings stretch in these locations thanks to lower costs of living, healthcare and utilities. The mild year-round temperatures are an added bonus.
While you’re still in the workforce, your 50s are the time to maximize 401k contributions and employer matching benefits — otherwise you’re leaving money on the table. Get knowledgeable about the best ways to withdraw penalty-free from your accounts to retain as much of your earned money as possible.
Click to keep reading about how today’s retirees are surviving financially.