US Debt Threatens Retirement Goals

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover how US debt impacts retirement planning and explore safe money alternatives to secure your future. Learn more at SafeMoney.com. According to MagnifyMoney, people are carrying more than goal checklists into retirement. A recent analysis by them looked at data from the University of Michigan Retirement Research Center (MRRC) Health and Retirement Study. Their results found that more Americans are shouldering debt in their 50s and over. It’s a serious finding, given that Americans have named mortgages and other debts among their top five money concerns . In the study, MRRC researchers survey over 20,000 Americans aged 50+ on many topics of financial well-being. This publication showed survey results from 2014. MagnifyMoney found a number of debt trends that could undermine, or even cripple, the retirement goals of numerous Americans. Let’s look at how debt is affecting older Americans and their post-work lives. Older Americans’ Debt is Increasing Both the percentage of older Americans with debt and the debt load they’re carrying are rising. In 1998, about 37% of people ages 56-61 shouldered debt. Their average debt load, in 2012 dollars, was $3,634. Contrastingly, in 2014 42% of people within that age group carry debt. On average, their debt load is $17,623, a 385% increase from the 1998 debt-load level. And the effects of inflation on mortgages don’t fully explain the increase, says MagnifyMoney. More than Just Rising Mortgage Costs According to MagnifyMoney, nearly one-third (32%) of people aged 50 and up carry non-mortgage debt from month to month. On average, those with debt have $4,786 in credit card debt and $12,490 in total non-mortgage debt. As MagnifyMoney points out, debt obligations can do a number on people living on a fixed income, since interest rates on debt tend to rise faster than asset earnings. In fact, some older Americans were carrying debt levels they might not be able to pay. Credit Card Debt a Weighty Factor According to the analysis, 40% of all older Americans carry credit card debt exceeding $5,000. Going further, 22% have a credit card debt burden of over $10,000. On average, those holding $10,000+ in credit card debt don’t have enough money in their checking accounts for debt payoffs. The graph below shows different account balances f