Credit card debt is getting in the way of saving for many workers nearing retirement

Sat, Mar 15, 2025, 5:01 AM 5 min read

Overwhelmed by out-of-pocket medical costs, Valerie Towe and her husband, Paul, saw their debt load begin to swell last year.

Facing a steady stream of bills for 77-year-old Paul’s chronic obstructive pulmonary disease, rheumatoid arthritis, and neuropathy, Valerie began to tap credit cards to keep up.

“I wasn't able to make ends meet,” Valerie, 65, told Yahoo Finance.

The cost of weekly groceries added to the strain — nearly doubling last year, she said. And to top it off, as her caregiving duties ramped up, Valerie shifted to a part-time job.

“When you're a caregiver, you can't work a full-time job,” she said.

The worst of it, as anyone who has rolled over credit card balances month to month knows, is the ballooning debt that accrues when you can only pay the minimum amount of the balance on credit cards that are ladened with interest rates topping 20%.

That’s all Valerie has been able to do, and the result is a gut-punching credit card debt nearing $30,000, she said.

Nearly half of adults 50 and older who carry credit card debt use credit cards to pay for basic living expenses, according to a new AARP report. And roughly 3 in 10 older adults with credit card debt have more of it than a year ago.

More sobering: Nearly half of them owe $5,000 or more, and 28% carry a balance of $10,000 or more.

That has serious repercussions for retirement savings.

“Many older Americans with credit card debt who hope to retire soon will have to make the difficult decision of whether to pay down debt or save for retirement,” Indira Venkat, senior vice president of research at AARP, told Yahoo Finance. “For those who have already retired and are living on a fixed income, it can be a challenge to both pay down a credit card and make ends meet.”

Read more: Best ways to pay off credit card debt

She’s right on that one. When people say what they regret the most after they retire, a biggie is retiring with too much debt.

In 2024, almost 7 in 10 retirees with debt reported having credit card debt outstanding, per a survey from the Employee Benefit Research Institute (EBRI). That’s up from 4 in 10 four years ago.

And while the rising cost of groceries, housing, and vehicles are the byproducts of sticky inflation, one of the biggest culprits of credit card debt is out-of-pocket medical costs such as prescription drugs, which the Towes are grappling with. Dental and vision care add up too, Venkat said.

If they could turn the clock back, nearly a quarter of retirees say they would have made paying down credit card and other debts a priority before they exited the workforce, according to a new Fidelity Investments report.