No, most people are not debt-free when they retire. Studies show only about 37% of retirees are completely debt-free, while a significant majority carry mortgages, credit card balances, or other debts into retirement. Household debt for those aged 65–74 has increased significantly, often exceeding $100,000 per household, driven by longer lifespans and rising costs.
Only 37% of retirees are debt-free, with credit card balances the most common form of debt retirees hold. Some debt gives you financial flexibility and lets your assets grow faster, but other debt drains your finances.
While it's ideal to enter retirement debt-free, that goal may not be attainable. At a minimum, experts recommend addressing high-interest debt, such as credit card balances, before retirement. Whether you target your student, car or home loans next will depend on your situation and outlook.
97.1% of U.S. adults aged 66-71 have a median nonmortgage debt of $11,349, with auto loans, credit cards, and student loans being major contributors. Texas and Florida metros report the highest median retirement-age debt, with San Antonio leading at $18,107.
By the age of 50 it is ideal to be debt-free, and your retirement savings should be enough to give you a comfortable life. Retiring with debt can be a stressful.
The study showed that 97.1% of Americans aged 66 to 71 have debts that are not mortgages. The most recent Federal Reserve Study of Consumer Finances was in 2022, and that showed that the average debt for older adults is between $95,000 and $172,000.
The 3-6-9 rule in finance is a guideline for building an emergency fund, suggesting you save 3 months of essential expenses for stable jobs, 6 months for most people (especially those with families/mortgages), and 9 months for those with irregular income (freelancers, sole earners) or high financial risk. It's a flexible strategy to provide financial security, helping you avoid debt or panic withdrawals during unexpected job loss or emergencies, with the exact target depending on your income stability and dependents.
Even though more than half of Boomers plan to retire debt-free, the numbers tell a different story. A survey by the Employee Benefit Research Institute (EBRI) reveals that only 23% of retirees aged 65 to 74 achieve that goal.
The 70% rule for retirement savings says your estimated retirement spending will be 70% of your pre-retirement, post-tax income. Multiplying your post-tax income by 70% can give you an idea of how much you may spend once you retire.
Other measures—including net worth, retirement savings, living without debt, and financial flexibility—are not directly related to income. A high-income person with a lot of credit card debt may not be as rich as a debt-free person with a modest income.
Mortgages make up about 70% of household balances. Conventional wisdom has long recommended that homeowners pay off their mortgage before retiring. Yet over the past three decades, more older adults are carrying their mortgage into retirement, while the amount owed has increased dramatically.
No More Than Seven Times in a Seven-Day Period
Under the 7-in-7 Rule, debt collectors are restricted to contacting a consumer no more than seven times within any seven days. This rule applies to all communication methods, whether phone calls, emails, text messages, or other forms of contact.
Without debt, you can focus on building more savings, investing those extra funds and just simply having more peace of mind about your finances. Paying off all your debt, however, doesn't always make sense.
Common reasons people end up hating retirement include lack of purpose, reduced social connection, unplanned or forced retirement, health issues, and financial stress.
Most people retire with significantly less than the $1 million+ many think they need, with median savings for those nearing retirement (ages 65-74) around $200,000, while averages are higher due to large balances held by a few, meaning many individuals fall short, with some studies showing 25% of non-retirees having zero savings.
You don't have to choose between paying off debt and saving for retirement. Doing both is possible with the right strategy. It's best to prioritize eliminating high-interest debt, then compare the interest rate on low-interest debt to the potential return on an investment.
One in five Americans over the age of 50 have no retirement savings, according to a survey by the AARP. And even if you have something tucked away, it may not be enough — though that is something you can change even late in the game.
The Rule of 69 is a simple calculation to estimate the time needed for an investment to double if you know the interest rate and if the interest is compounded. For example, if a real estate investor earns twenty percent on an investment, they divide 69 by the 20 percent return and add 0.35 to the result.
“You're looking for three things, generally, in a person,” says Buffett. “Intelligence, energy, and integrity. And if they don't have the last one, don't even bother with the first two.
The 70/20/10 rule for money is a simple budgeting guideline that splits your after-tax income into three categories: 70% for Needs (essentials like rent, groceries, bills), 20% for Savings & Investments (emergency funds, retirement), and 10% for Debt Repayment & Donations (extra debt payments or giving). It balances immediate living costs with long-term financial security, helping you cover necessities while building wealth and paying off liabilities.