Here's Why Credit Card Debt Is a Problem in Retirement -- and What to Do About It

When we imagine people owing money on their credit cards, we may be inclined to conjure up images of younger folks whose debt got ahead of them. The unfortunate reality, though, is that plenty of older Americans have credit card debt and end up carrying it with them into retirement.

Ascent research finds that Gen Xers carry the most credit card debt of any generation today, with an average balance of $8,870 as of 2023. That's problematic, though, because older Gen Xers may be right on the cusp of retirement. Furthermore, as of 2023, the average credit card balance held by baby boomers was $6,601 -- not a negligible amount.

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Credit card debt can be a problem at any age. But it's especially worrisome in retirement. So if you're entering retirement with a credit card balance hanging over your head, you may want to take one key step.

Why credit card debt is such a problem for retirees

Credit card debt isn't a great thing to be carrying in general. But it can be especially troublesome for retirees -- namely because any sort of debt can constitute a financial burden at that stage of life.

Many retirees end up being forced to live on a fixed income that consists largely of Social Security. And people in that boat may find it extremely difficult to cover monthly debt payments on top of their essential bills.

Also, the very nature of credit card debt makes it harder to keep up with on a fixed income. That's because the interest rate on a credit card balance can vary with market conditions, causing borrowers' monthly payments to increase. That's a tough thing to manage in general -- but especially when you may not be able to increase your income.

It could pay to consolidate your credit card debt into a loan

If you're a near- or current retiree with credit card debt, one thing you may want to look at is consolidating your balance(s) into some type of fixed-rate loan. If you own a home, a home equity loan may be an option. Otherwise, you can look at a personal loan.

But in either scenario, you're locking in a fixed rate of interest on your debt, leaving you with fixed monthly payments to make. That could make your debt a lot more manageable.

In an ideal world, it's a good thing to enter retirement debt-free, and to avoid debt on credit cards. If you missed that boat, all isn't lost. But consider converting your credit card debt to a fixed rate loan so you're able to keep up with it more easily.

Furthermore, if you're already retired but are in good enough health to be able to take on a part-time job, you may want to do so until your debt is paid off. That way, you might end up repaying your debt ahead of schedule, thereby minimizing the amount of interest you end up accruing. Plus, earnings from a job might allow you to build a small savings cushion so you're not forced to go into debt again later on in retirement.

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