While most Americans recognize it is increasingly their responsibility to fund retirement rather than relying solely on a pension or Social Security, 43% fear their retirement dreams could be disrupted if Social Security runs dry, according to the MagnifyMoney survey.
Already, the U.S. Department of the Treasury has said the Social Security trust fund will run out of money sooner than expected due to the Covid pandemic.
The outlook threatens to shrink retirement payments and increase health-care costs for older Americans.
Carrying some debt in retirement isn’t necessarily bad if those debt payment plans don’t put a huge financial strain on your retirement income, said Shelly-Ann Eweka, senior director of financial planning strategy at TIAA.
It’s likely that retirees will have to factor in some amount of debt repayment, such as a mortgage or auto loan, but since those typically come with relatively low interest rates, “that’s what I’d call manageable debt,” Eweka said.
“Credit card debt has higher rates and it’s easy to get caught,” she added. “The next thing you know, you are struggling.”
Your retirement income — monthly payments from investments and Social Security, for example — should cover debt payments and still afford you a comfortable lifestyle, she said.
Otherwise, you may need to work longer or find a supplemental source of income from a part-time job, Eweka suggested.
Most experts recommend meeting with a financial advisor to determine exactly what your retirement will look like.
There’s also free help available through the National Foundation for Credit Counseling.
