Retired or Retiring and In Debt? Here’s How To Manage It

Close up of two seniors at a trainstation.
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Far more seniors go into retirement with debt today than ever before, and they carry more debt longer than any generation in the past, according to the National Council on Aging (NCOA). Medical debt, credit card debt and housing debt are the primary culprits, all of which force millions of seniors to put off important needs like car repairs just to keep the wolves at bay for another month. In the worst cases, medicine and even food are sacrificed to the altar of high-interest loans. 

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If you or someone you love is a senior who is struggling with debt, you’re hardly alone. The good news is, there are plenty of places you can turn for help. 

Read: Is an AARP Membership Still Worth It?

Get the Most Out of All the Benefits You Have Coming

All seniors, debt or no debt, should visit the National Council on Aging’s BenefitsCheckUp site. There are 2,500 programs available to seniors across all kinds of categories, including medication, healthcare, income assistance, food and nutrition, tax relief, help for veterans and employment.

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Just type in your ZIP code to find out which benefits are available in your area, answer a few quick questions and join the more than 9 million people who have used it to take advantage of nearly $40 billion in benefits. 

Whether or not you find a program specific to helping you manage debt, you’ll be better prepared to get out of the red if you secure benefits that can help you relieve financial pressure in general. 

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You Are Not Alone — Get a Debt Counselor in Your Corner

Seniors in almost all circumstances can enlist the help of a credit/debt counselor for free. If you’re struggling with debt, this is a good place to start. According to the Federal Trade Commission (FTC), most reputable credit counselors are part of nonprofit organizations. They can talk you through your situation on the phone, online or in person. Start looking for free credit/debt counseling services at:  

  • Your local credit union
  • Your local university 
  • Your local branch of the U.S. Cooperative Extension Service
  • Your local consumer financial protection agency
  • Your bank or other financial institution
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The United States Trustee Program maintains a list of credit counseling agencies, as well. When you find one you like, check with your state attorney general to see if it’s facing any complaints or legal actions. According to the AARP, which offers a good primer on how seniors can choose the right debt counseling service, you should get started as soon as possible — taking no action always makes things worse.

Learn More: 30 Greatest Threats to Your Retirement

Find Organizations With Senior-Specific Missions

The following organizations provide services designed specifically for the special challenges that seniors face when they fall into debt. They include things like free credit counseling, legal aid for things like collections, bankruptcies or judgments, debt relief services, education and workshops, credit repair and financial planning. 

  • PensionHelp America
  • National Council on Aging’s AgeWell Planner
  • National Association of Senior Legal Hotlines
  • MoneySmart For Older Adults by the FDIC
  • AARP Foundation Finances 50+
  • Supplemental Security Income

Many religious and secular nonprofits also provide free financial help to seniors for debt relief and other immediate needs, including: 

  • Catholic Charities USA
  • International Association of Jewish Free Loans
  • Episcopal Church Relief and Development Service
  • Love Inc.
  • Lutheran Services in America

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Alternative Options Can Be Useful, but Risky

If you have a life insurance policy that you no longer need, you might be able to sell it through a broker. Not only will you ditch the monthly premium payments, but you can also dedicate some or all of the cash payout to tackling your debt.

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Be warned, however, there is a lot to consider. It’s a complicated process that must include a broker as a go-between — and those brokers are known for taking sky-high commissions. It’s hard for the average person to know if they’re getting a good price, the bidding process is complicated, payouts are often small and whatever cash you do receive will probably be taxed. 

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Also, there’s one last morbid but noteworthy consideration — your death becomes a profit motive for a stranger.

There’s also the option of a reverse mortgage, a transaction that lets homeowners 62 and older convert some of the equity in their home to cash without selling their house. Reverse mortgages can and do help some seniors get their hands on sorely needed money for things like paying down debt. Here, too, however, it’s a complicated process that isn’t right for everyone. There are fees, risks, tax implications and consequences for your spouse and/or heirs. Visit the FTC’s reverse mortgage page and the NCOA’s reverse mortgage counseling page to learn more before you decide.

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Last updated: June 10, 2021

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for, a financial publication in the heart of Wall Street's investment community in New York City.
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