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How to retire while you still have debt
Roughly 59% of retirees carry debt, according to the Federal Reserve’s latest Survey of Consumer Finances.1 If you’re approaching retirement with a mortgage, student loans, or other obligations, your debt may not automatically disqualify you from retiring.
The more important question is whether your retirement income plan can comfortably support your debt payments alongside housing, healthcare, taxes, and other essential expenses.
Key Takeaways
- More than half of adults have debt in retirement.
- Whether you can retire with debt depends less on the balance itself and more on whether your retirement income can comfortably support the payments.
- Mortgages, student loans, and credit card debt can each affect retirement planning differently and should therefore be evaluated individually.
- A strong retirement plan balances debt repayment, income planning, savings, and protection strategies to help support your long-term financial goals.
Yes, you can retire with debt—but it requires a plan
The presence of debt alone doesn’t determine whether you’re ready to retire. What matters is whether your retirement income can reliably cover your debt payments along with your other essential expenses.
For example, let’s consider Retiree A and Retiree B.
- Retiree A has a fixed-rate mortgage with 10 years left and enough retirement income to comfortably cover the payment.
- Retiree B carries several credit card balances and struggles to pay more than the minimum each month.
Both have debt, but the impact on their retirement plans could be dramatically different.
Not all debt is equal in retirement
Around 97.1% of retirement-aged adults have debt2. But the reality is that some forms of debt can place more financial strain on your retirement income plan than others.
Take credit card debt, for example. The AARP found that nearly half of adults age 50 and older carry month-to-month credit card debt.3 In a separate survey from the Employee Benefit Research Institute, 68% of retirees with debt reported carrying credit card balances.4
Credit card interest rates often exceed what many investors can reasonably expect to earn from a retirement portfolio over the long term. This is why they can be so detrimental to your long-term financial wellness.
Lower-interest debt, such as a fixed-rate mortgage or federal student loan, may be okay if you can continue to make manageable payments while preserving retirement savings.
This table highlights how debts could affect you in retirement:
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Often carries high interest rates and can grow quickly if balances aren’t paid down |
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May create pressure if payments are large or interest rates are high |
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Secured by an asset and may be manageable if payments fit comfortably within the income plan |
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Can continue into retirement and require careful income planning |
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Mortgage debt in retirement: the most common situation
Nearly 10.7 million people age 65 and older have a mortgage, according to census data.5 For many Americans, this could be the largest debt you carry into retirement.
If your primary goal is to enter retirement debt-free, you could focus on paying off your mortgage first. But for many, maintaining a low-interest mortgage in retirement may allow you to preserve savings, maintain liquidity, or continue pursuing other financial goals.
A financial professional can help you evaluate these factors to determine whether entering retirement with a mortgage makes sense:
- Is the mortgage interest rate relatively low or high?
- Is the interest rate fixed or variable?
- How many years remain on the loan?
- Can your retirement income comfortably cover the payment?
- What would happen to your savings if you used a large portion of it to pay off the mortgage early?
Student loan debt is becoming a retirement planning issue
Student loan debt is no longer just a challenge for recent graduates. A growing number of Americans are carrying student loans into their 60s and beyond, either for their own education or through Parent PLUS loans taken out to help children attend college.6
The average student loan balance is $43,392 for borrowers age 62 and up. Federal student loan debt for this group has increased by more than 33% since 2017.7
Unlike a mortgage, student loans aren’t tied to an appreciating asset. You still need to account for those payments in your retirement income plan, but there may be fewer financial benefits to carrying the debt long term.
The Department of Treasury reports that nearly 25% of student loan borrowers are in default.8 When your loans are in default, the Department of Education can garnish tax refunds and Social Security benefits to collect payments.9
For these reasons, it’s important to incorporate student loan payments into your retirement income plan just like any other recurring expense.
How debt changes retirement income needs
Every debt payment you carry into retirement is a fixed expense that competes with other spending needs. As a result, this could impact how much retirement income your plan needs to generate for you each month.
Many retirement income strategies aim to cover essential expenses with reliable income sources, and discretionary expenses with investment portfolio returns.
Depending on your goals, these reliable sources of income could include:
- Social Security
- Defined-benefit pensions
- Whole life insurance
- Different types of annuities
Insurance can help protect debt-carrying households
If life takes an unexpected turn in retirement, your debt won’t just disappear. For example, take a couple who enters retirement with a remaining mortgage balance of $100,000. Their retirement income plan works well as long as both spouses are alive and receiving Social Security and retirement income.
But what happens if one spouse dies unexpectedly? Without a plan in place, the surviving spouse may still be responsible for the mortgage payment while living on a reduced household income.
This is one reason life insurance can be an important part of a retirement plan, especially for retirees with debt. A death benefit can help provide funds to pay off a mortgage, eliminate other outstanding debt, or help replace lost income so surviving family members aren’t left carrying the financial burden alone.
Disability insurance can also play an important role during the years leading up to retirement. According to the Social Security Administration, approximately 25% of today's 20-year-olds will experience a disability before retirement age.10
If an illness or injury prevents you from working, disability insurance can help replace a portion of lost income and reduce the risk of falling behind on debt payments or retirement contributions.
Building a plan that balances debt, savings, protection, and retirement income
Retirees with debt can often benefit from having a complete retirement plan that brings together these four key elements:
- Debt strategy. Determine which debts should be prioritized and how they’ll fit into your retirement timeline.
- Savings and investment strategy. Continue building wealth while balancing competing goals like debt repayment and retirement readiness.
- Protection strategy. Help ensure unexpected events don’t derail your finances or create burdens for loved ones.
- Retirement income strategy. Create a plan for covering monthly expenses, including debt payments, throughout retirement.
At New York Life, financial planning is an ongoing process that considers all of these factors together. Rather than treating debt, savings, protection, and retirement income as separate decisions, a financial professional can help you understand the trade-offs and build a strategy designed to adapt as your life evolves.
Frequently asked questions
Many people retire with a mortgage, so it doesn’t automatically signal that you should delay leaving the workforce. The key is to make sure your retirement income can comfortably cover the payment alongside your other essential expenses.
Whether you should pay off debt before you retire depends on the debt’s interest rate and how much income you have to cover expenses. High-interest debt like credit cards may warrant more aggressive pay-down than, say, a lower-interest mortgage or auto loan.
Yes. In some cases, you can have your Social Security benefits offset if you have federal student loans in default.11 If you’re approaching retirement with student loan debt, speak with a financial professional about your repayment options to avoid default.
Credit card debt can be a problem for anyone, especially retirees on a fixed income. Credit cards in particular have high interest rates that can feel almost impossible to get ahead of if you only make the minimum payments. It’s generally best to get out of credit card debt as soon as you can, no matter your life stage.
You can use a retirement savings calculator to estimate how much income you may need to bring in to cover all of your debt payments in retirement, plus other essential and discretionary expenses. If this number is much higher than you’re on track to have at retirement age, then it could signal that you have too much debt to retire.
RELATED CONTENT
Ready to build a retirement plan that accounts for debt?
A New York Life financial professional can help you evaluate your debt, retirement income, protection strategies, and long-term goals to gauge if you’re on track to retire.
1Federal Reserve Board, "Survey of Consumer Finances: Debt by Age of Reference Person," accessed June 5, 2026.
2LendingTree, "Places Where People at Retirement Age Carry the Most Debt," accessed June 5, 2026.
3AARP, "Credit Card Debt Among Adults Age 50-Plus," 2025.
4Employee Benefit Research Institute, "2024 Spending in Retirement Survey," 2024.
5U.S. Census Bureau, "American Community Survey 1-Year Estimates, Table B25027: Mortgage Status by Age of Householder," accessed June 5, 2026.
6AARP, "Student Loan Repayment Changes Could Impact Older Borrowers," accessed June 5, 2026.
7Education Data Initiative, "Student Loan Debt by Age Group," accessed June 5, 2026.
8U.S. Department of the Treasury, "Treasury Offset Program Continues to Recover Delinquent Debt Owed to States and Federal Agencies," accessed June 5, 2026.
9Consumer Financial Protection Bureau, "Issue Spotlight: Social Security Offsets and Defaulted Student Loans," 2024.
10Social Security Administration, "What You Need to Know When You Get Social Security Disability Benefits," Publication No. 05-10029, 2025.
11Consumer Financial Protection Bureau, "Issue Spotlight: Social Security Offsets and Defaulted Student Loans," 2024.