Retirees’ Credit Card Debt Levels Are Climbing | Global News Avenue

Retirees are dealing with high prices while also facing credit card debt.

A recent Employee Benefit Research Institute (EBRI) survey of more than 3,600 retirees found that more than two-thirds will have outstanding credit card debt by 2024. This is up from 40% in 2022.

Although inflation has fallen from its peak two years ago, prices remain high and inflation remains above the Fed’s 2% target. This year, nearly one-third (31%) of retirees say spending is more than they can afford. By comparison, by 2022, only 17% of retirees say they will spend more than they can afford.

People are retiring early – and it could hurt their finances

In the survey, nearly 60% of retirees said they would retire earlier than expected. The most common reasons were health problems or disabilities (38%) or the employer going through changes such as layoffs (23%). When respondents retired, nearly half said they had not saved enough for retirement.

At the same time, many retirees are unable to access or fully benefit from Workplace plans, such as 401(k) or an investment account, e.g. Individual Retirement Account (IRA) and Roth IRA. Responses to the EBRI survey indicate that few rely on such savings to fund retirement: Only 17% of retirees use 401(k) plans as a source of retirement income, while 20% use funds in an IRA.

Many respondents said they relied on social security (80%) or guaranteed income source (39%) such as a pension or annuity.