Most retirees are now carrying credit card debt

Following years of heightened inflation that has pushed costs up, retirees are increasingly turning to their credit cards – carrying balances at much higher rates than in the past.

This year, 68 percent of retirees report having outstanding credit-card debt, up from 40 percent who said the same in 2022 and 43 percent in 2020, according to a recent paper from The Employee Benefit Research Institute.

“The rise is substantial,” said Bridget Bearden, research and development strategist at EBRI. Everyone has been affected by inflation, but some more so than others. Among retirees with household income between $30,000 and $40,000, 79 percent said they had credit card debt outstanding, Bearden said. That is in addition to car loans and medical debt, both of which can also weigh heavily on retirees’ budgets.

By comparison, over 69 percent of those with less than $30,000 in household income reported having outstanding credit card debt, and the same was true for just over 58 percent of households with $100,000 or more in income.

Even as inflation has returned to relatively normal levels, prices remain high because of years of above-average inflation that resulted from the Covid pandemic. Federal Reserve Chair Jerome Powell acknowledged the ongoing issue for consumers during a press conference last week, noting that it would take longer for wages to increase relative to prices and for people to no longer feel the sting of higher-than-expected spending.

Thirty-one percent of the more than 3,600 people ages 62 to 75 who were surveyed said their spending is higher than they can afford in 2024, an increase from 27 percent who said so in 2022 and 17 percent in 2020, EBRI found.

Consumer Price Index data published this week showed inflation at about 2.6 percent. That’s close to the Social Security cost-of-living adjustment for 2025, at 2.5 percent, though many retirees will likely still be a financial bind.

Two areas where retirees have been hit particularly hard are housing and medical costs – those were the leading factors people cited for unexpected expenses that led them to carry credit-card balances, especially for those with household income between $30,000 and $50,000, EBRI found.

“The credit card is the easiest to use” for unexpected costs, given that cards can be charged immediately, while other options, such as tapping into home equity, simply take longer, Bearden said.

And as many baby boomers are reaching traditional retirement ages, some must exit the workforce for factors beyond their control, including health problems and layoffs, she said.

More than half, 58 percent, said they retired earlier than expected, with 38 percent attributing that to health issues or disabilities and 23 percent citing downsizing, closures, or company reorganizations.

“There’s a high correlation between those that are forced to retire early … and not having enough saved and having reduced spending expectations and lower retirement wellbeing,” Bearden said. Additionally, “it all blends together in this group of retirees that didn’t have access to guaranteed income,” such as traditional defined-benefit pension plans.

An decreasing percentage of people report having emergency savings that help them cover unexpected costs. Fifty-nine percent said in the 2024 survey that they have such savings, down from 69 percent two years ago.

Former public-sector workers generally reported higher financial confidence in retirement, correlating with their access to pensions.

On a scale of one to 10, retirees who spoke with EBRI on average said that their lifestyles aligned with their pre-retirement expectations at a level of 5.7, down from 6.4 in 2022 and 6.8 in 2020.

On their general satisfaction with life in retirement, people gave an average rating of 6.9, down from 7 in 2022 and 7.4 in 2020.

Other factors that affect happiness in retirement – including social connections and health – should not be ignored, Bearden said.

“If we can restore some of those elements, then we have reason to be optimistic” about retirement security, she said.