Only 37% of Retirees Are Debt-Free — And What You Can Do About It

Retirement is meant to be a period of relaxation and freedom from financial stress. But data from the Employee Benefit Research Institute (EBRI) shows that only about 37 % of retirees have no debt when they retire. That means most people carry some form of debt even after stopping work — and that can affect how comfortable and secure their retirement feels.

Why So Many Retire With Debt?

Many factors make it harder to retire debt-free:

• Housing costs are higher now — more retirees still have mortgages than in the past.
• Inflation, medical bills, job loss, or early retirement can drain savings and force people to borrow.
• Some retirees never had enough time or income to fully pay off loans before retiring.

Because of this, debt becomes common: credit card balances, mortgages, and car loans are among the most typical kinds of debt retirees carry.

What Is “Good Debt” vs “Bad Debt”?

Not all debt is bad. The article points out that:

• Good debt might help you financially — such as a low-interest mortgage that lets you keep cash invested elsewhere.
• Bad debt—such as high-interest credit cards or unpaid personal loans—can quickly drain your retirement income and savings.

Understanding this difference helps you make smarter choices before and after retirement. 

Ideas to Reduce or Avoid Debt in Retirement

Here are practical steps from the article that can help improve your financial situation:

1. Compare interest rates on debts and investments
If the interest you pay on a loan is higher than what you earn on your savings or bonds, it could make sense to use savings to pay off high-cost debt.

2. Improve your cash flow
Look at how much money you have coming in versus going out. Reducing expenses or finding ways to boost income can free up more money to pay down debt.

3. Be strategic about debt
Some debt might be useful if it helps you keep investing or save on taxes — but avoid carrying any debt you can’t easily manage.

Final Takeaway

Retiring debt-free isn’t the same for everyone. For many, it’s a great financial goal. But what matters most is avoiding high-interest, unmanaged debt that strains your retirement income. With careful planning, clearer budgeting, and smart decisions about which debts to keep or pay off, you can improve your financial comfort in retirement.