Spring Financial Clean-Up: Managing Debt in Retirement

For older Americans, debt is becoming a bigger challenge.

According to the U.S. Government Accountability Office, the median debt for households aged 65 and older was $55,300 in 2016—nearly three times higher than in 1989.¹ This includes mortgage debt, credit card balances, and even student loans.

Debt in retirement can weigh heavily on your finances, making it harder to afford essentials like healthcare and housing.

High-interest debt, especially credit card balances, can quickly eat into your retirement savings. For example, credit cards with APRs of 20% or more can generate significant interest over time. The Washington State Department of Financial Institutions warns that making only minimum payments could result in paying 2–3 times the original balance.²

Strategies for managing debt in retirement

The good news? With focus and discipline, you can take control of debt—and create more room to enjoy the retirement you’ve earned.

Here are six steps to help you start:

1. Take an honest look at your finances.

List all outstanding debts, including balances, interest rates, and monthly payments. This clarity will help you prioritize.

Include a free annual credit check.³ It may remind you of forgotten debts and allow you to correct any reporting errors.

2. Prioritize high-interest debt.

The “avalanche method” focuses on paying off debts with the highest interest rates first, saving you the most in the long run.

Some prefer the “snowball method,” which builds momentum by eliminating smaller balances quickly.

A financial advisor can help determine the best approach for you. The key is to pick a plan and stick with it—giving you peace of mind and confidence each month.

3. Consider debt consolidation.

Combining multiple debts into one loan can simplify your finances and reduce your interest rates. Options include:

Personal loans: Fixed payments, typically lower rates than credit cards
Home equity loans/lines of credit: Lower rates, but your home is collateral.⁴
Balance transfer credit cards: Some offer 0% interest for a limited time, letting you pay down balances interest-free

4. Explore reverse mortgages.

Homeowners 62 and older can tap into their home equity through a reverse mortgage, without immediate repayment.

However, reverse mortgages can affect estate planning and government benefits.⁴ Make sure you understand the risks and fees before moving forward.

5. Tighten your budget.

A retirement-friendly budget can help free up funds to pay down debt—and prevent new debt from building up.

The FDIC⁵ suggests strategies like:

Cutting discretionary spending (dining out, entertainment)
Negotiating lower rates for insurance and utilities
Using available benefits like senior discounts and property tax relief

6. Work with a financial professional.

A certified financial planner or credit counselor can help tailor a debt management strategy to your situation. The Federal Trade Commission⁶ recommends working with nonprofit credit counseling agencies that offer unbiased advice.

Spring Cleaning for your finances

Just like spring cleaning helps refresh your home, financial organization can bring clarity and confidence.

The Consumer Financial Protection Bureau (CFPB) recommends a spring financial checklist²:

Review your credit report for errors (available for free annually from each credit bureau)
Organize key documents (wills, insurance policies, retirement accounts) and ensure loved ones know where to find them
Update your budget based on current expenses and income
Set clear financial goals for the year ahead

Managing debt in retirement is possible—with the right tools and mindset. With a little springtime motivation, you can lighten your financial load and focus on what matters most.

This season, go ahead and clear out that garage, but don’t forget to tidy up your finances, too. You deserve a retirement that’s less stressful and more secure.

U.S. Government Accountability Office. (2021, December). Retirement security: Debt increased for older Americans over time, but the implications vary by debt type. https://www.gao.gov/products/gao-21-170
Consumer Financial Protection Bureau. (2018, March 20). 4 tips to spring clean your finances. https://www.consumerfinance.gov/about-us/blog/its-not-too-late-spring-clean-your-finances/
Washington State Department of Financial Institutions. (n.d.). Dealing with debt. https://dfi.wa.gov/financial-education/dealing-debt
Consumer Financial Protection Bureau. (n.d.). Considering a reverse mortgage? https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/
Federal Deposit Insurance Corporation. (n.d.). Preparing for retirement. https://www.fdic.gov/resources/consumers/consumer-news/2022-01.html