Debt is more acceptable these days, but it is becoming a drag on retirement, especially when the unexpected happens.
According to new research by Employee Benefit Research, more households headed by someone 75 or older are in debt. The number for whom debt is excessive – more than 40 percent of income – has increased 25 percent in the last 10 years. In fact, 50 percent of 75-plus households have debt in housing or credit cards, up from 31 percent in 2007.
Newly retired people or those nearing retirement are more likely to have debt than retirees in the 1990s, even though debt payments as a percentage of income have declined.
According to Forbes, it is important to get debt paid off when approaching retirement. Unexpected problems can cause serious financial woes for new retirees. Health problems after retirement or a job loss before retirement can send people burdened with debt into bankruptcy.