Half of Retirees Struggle with Debt

Stressed retired couple
Half of retirees with pensions are expected to retire with debt, according to a survey.

A report released Thursday by Fidelity Investments states that although baby boomers with current pension plans feel more flexible about their expected retirement date, they still have financial concerns. Almost half, 48 percent, of all baby boomers, with or without pensions, predict they will retire with some form of debt, including personal loan debt.

More than three million baby boomers, adults born between 1946 and 1964, are turning 65 yearly and face retirement options.

Half are burden by debts that carry into their retirement years. The largest form of debt is from mortgages, followed by personal loans, which include credit cards. The other debts include car payments and student loans.

Regardless of a pension, 70 percent of retirees wish they had saved for retirement more during their working years. Additional funds would lessen the financial strain which forces some retirees into even more personal loan and credit card debt.

Fidelity, a top provider of corporate pension services in the United States, reported that over half of surveyed participants (58 percent) said they were not familiar with procedures to sign up for pension payments.

The study covered 1,018 baby boomers that work in or recently retired from the corporate sector of employment. Although not all professions offer retirement plans, some retirees did not access funds available.

A lack of planning could be to blame.

“Our research uncovered the fact that even the small population of baby boomers who actually receive a pension payout today feel they should have saved earlier than they did for their income in retirement,” Wendy Foster, senior vice president at Fidelity Investments, said in a release.

But there are ways to predict the burden of personal loan, credit card and mortgage debt.

“Saving more aggressively and planning well ahead of your expected retirement date becomes even more critical for the majority of Americans, particularly younger workers, without traditional pensions,” Foster said.

Deborah Pont, director of public relations for Fidelity, told that managing expenses in retirement can differ dramatically from one’s working years.

“After the steady stream of a regular paycheck goes away, figuring out how to create one’s own income stream in retirement can be a challenge,” Pont said.

In the past, personal loans and extra debt could be paid off with the next paycheck. But without a full time job, many retirees lack that financial security.

And new bills seem to erupt, such as added healthcare costs which Pont said, add “another dimension of complexity.”

“Taking a holistic view of all sources of retirement income and balancing that against one’s daily living expenses and debt is essential to understanding whether a retirement income plan looks like it could be sufficient, or if needs adjusting,” Pont said to “Retiring with as little debt as possible can give many Americans a significant leg up in their golden years, especially those who are trying to manage new financial priorities for the first time.”