Can You Retire If You Still Have Debt?
Executive Summary
After years of working with clients, financial advisor Keith Demetriades sees a clear trend: more people are entering retirement with debt than ever before. So the question isn’t whether you still owe money: it’s whether that debt fits the structure of your retirement plan. Understanding that distinction is key to managing debt in retirement.
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Can You Retire If You Still Have Debt?
Retiring with debt used to feel almost unthinkable. But retirement doesn’t look the same as it did a generation ago. AARP reports that for adults 65 to 74, household debt is up more than 400% since the early 1990s, and for those 75 and older, it’s up more than 700%.
1. Why are more retirees carrying debt today than in the past?
Federal Reserve data shows that the average debt for ages 65–74 is around $135,000, and even at 75 and older, the average is still about $95,000. Mortgages make up a large portion of that balance. Nearly 25% of adults over 75 are still making mortgage payments, the highest share since the late 1980s. Credit card debt has also climbed sharply, with 68% of retirees carrying a balance in 2024 compared with 40% just two years earlier.
Longer lifespans, rising costs, and slower income growth have reshaped the math for many households. Debt is no longer something people expect to eliminate before they stop working.
2. Can you retire if you still have debt?
Yes — but only if the debt fits inside your plan. You don’t need a perfect balance sheet to retire, but you do need predictable payments and a strategy that keeps your cash flow stable.
While you’re working, your income has flexibility. You can take on extra projects, shift priorities, or tighten spending. That flexibility disappears when paychecks stop.
Retirement becomes a cash-flow exercise, not an income exercise. What matters isn’t the debt itself — it’s how that debt behaves.
3. How do you know if your debt actually fits into your retirement plan?
Start by looking at the shape of your payments. Are they fixed? Are they stable? Do they fit naturally inside your expected retirement income? If so, the debt likely works inside your plan.
If payments jump around, strain your budget, or prevent you from taking care of other priorities — like home repairs or savings — that debt is competing with your plan instead of supporting it.
There’s also the emotional impact. If debt causes you to check your accounts more often or hesitate to spend on things that matter, the financial cost isn’t the only problem. Disruption is a sign that the debt needs attention.
4. How much debt is too much for retirement?
A helpful rule of thumb: if more than 20% of your expected retirement income is committed to debt payments, that’s a warning sign. You may still “make it work,” but the margin is tight. A small shift — higher insurance premiums, new medical costs, or lower investment returns — can create stress quickly.
Debt doesn’t just cost interest. It costs flexibility, and flexibility is one of the most valuable tools you have in retirement.
5. Which debts should you prioritize before you stop working?
Not all debt carries the same weight in retirement planning. The goal isn’t to be debt-free at all costs — it’s to be debt-stable.
- Start with high-interest or variable-rate debt such as credit cards and personal loans. These are the hardest to manage on a fixed income and the most disruptive when rates rise.
- Next, review short-term loans like car payments. Vehicles decline in value, so carrying that debt into retirement often reduces flexibility.
- Mortgages require the most nuance. A low, fixed-rate mortgage can work well inside a plan, especially if paying it off early would reduce your cash reserves. The key is whether the payment fits your monthly budget and long-term strategy.
The debts that deserve attention first are the ones that increase volatility or limit your options. Smart debt management means every payment has a purpose.
Retiring with debt is becoming a normal part of the picture, but it doesn’t have to derail anything. When you understand how your debt fits, what it costs, and where it disrupts your plan, you can build a retirement that supports both your income needs and your quality of life.
Real wealth starts with real life. Don’t just plan the numbers. Plan the life.
Contact Information
Keith Demetriades, CFP®, CKA®
Kingsview Partners — Pampa, Texas
(806) 223-1105
www.kingsview.com/advisor/keith-demetriades/
Keith believes real wealth starts with real life. He created the 4D Client Experience to help guide decision-making and ensure your money works as a tool to support your life. If you’re ready for a financial plan that reflects how you live and what you’re building toward, contact Keith at the number above or visit Kingsview Partners.
Disclaimer
The information provided in this blog is for educational purposes only and should not be considered financial advice. Please consult a qualified financial advisor to discuss your specific situation and needs. Past performance does not indicate future results, and all investments carry risks, including potential loss of principal. Any financial product or strategy references are purely illustrative and should not be construed as endorsements or recommendations.
Investment advisory services are offered through Kingsview Wealth Management, LLC (“KWM”), a SEC Registered Investment Adviser. Insurance products and services are offered and sold through Kingsview Insurance Services, LLC (“KIS”), by individually licensed and appointed insurance agents. KWM and KIS are subsidiaries of Kingsview Partners.
