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Credit card debt among retirees jumps significantly

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The share of Americans with credit-card debt in retirement has jumped considerably — a worrisome financial trend, especially for those with little wiggle room in their budgets, experts said.

About 68% of retirees had outstanding credit-card debt in 2024, up “substantially” from 40% in 2022 and 43% in 2020, according to a new poll by the Employee Benefit Research Institute.

“It’s alarming for retirees living on a fixed income,” said Bridget Bearden, a research strategist at EBRI who analyzed the survey data.

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“If so much of your Social Security income is now going toward your rent, then you have few funds left over for other essential expenses,” thereby driving up credit card use, Bearden explained.

Social Security benefits get an annual cost of living adjustment meant to help recipients keep up with inflation. However, data suggests those adjustments don’t go far enough. To that point, Social Security recipients have lost about 20% of their buying power since 2010, according to the Senior Citizens League.

EBRI polled 3,661 retirees between the ages of 62 and 75 during summer 2024. About 83% were collecting Social Security benefits, with the typical person getting roughly half their income from Social Security.

An ‘expensive form of borrowing’

Credits cards, which carry high interest rates, are an “expensive form of borrowing,” Federal Reserve Bank of St. Louis researchers wrote in a May 2024 analysis.

They’ve only become more expensive as interest rates have swelled to record highs.

Consumers paid a 23% rate on their balances in August 2024, up from about 17% in 2019, according to Federal Reserve data.

Accounting for the Human Factor

Rates have risen as the U.S. Federal Reserve raised interest rates to combat high inflation.

The average household with credit card debt was paying $106 a month in interest alone in November 2023, according to the Federal Reserve Bank of St. Louis.

Retirees’ debt was rising before the pandemic

Rising debt levels were a problem for older Americans even before pandemic-era inflation.

“American families just reaching retirement or those newly retired are more likely to have debt — and higher levels of debt — than past generations,” according to a separate EBRI study, published in August.

More and more families are having issues with debt during their working years, which then carries into and through retirement, the report said.

The typical family with heads age 75 and older had $1,700 of credit card debt in 2022, EBRI said in the August report. Those with heads age 65 to 74 had $3,500 of credit card debt, it said.

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1. Reduce expenses

There are a few ways retirees can get their credit-card debt under control, financial advisors said.

The first step “is to figure out why they had to go in debt in the first place,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. She’s also a member of CNBC’s Financial Advisor Council.

If a cardholder’s income isn’t enough to meet their basic spending, or if a big event like a home repair or medical procedure required them to borrow money, the person should consider lifestyle changes to reduce future expenses, McClanahan said.

Cardholders also need to see where they can cut spending, said McClanahan, who makes these recommendations:

  • Make sure you don’t have useless subscriptions or apps;
  • Do an energy audit on your home to find ways to cut your water, electric or gas bill;
  • Cook more and eat out less, which is both healthier and less expensive.

Retirees may choose to make a bigger lifestyle decision, including relocating to an area with a lower cost of living, said CFP Ted Jenkin, the founder of oXYGen Financial and a member of the CNBC Financial Advisor Council.

Meanwhile, any spending cuts should be applied to reduce credit card debt, McClanahan explains. Consumers can use a debt repayment calculator to help set repayment goals, she said.

2. Boost income

Retirees can also consider going back to work at least part time to earn more income, McClanahan said.

But there might be some “low hanging fruit” retirees are overlooking, advisors say.

For example, they may be able to sell valuable items accumulated over the years — like furniture, jewelry, collectibles — perhaps via Facebook Marketplace, Craigslist or a garage sale, said Winnie Sun, the co-founder of Sun Group Wealth Partners, based in Irvine, California. She’s also a member of CNBC’s Financial Advisor Council.

It’s alarming for retirees living on a fixed income.

Bridget Bearden

research strategist at EBRI

Sometimes, retirees hold onto such items to pass them down to family members, but family would almost certainly prefer their elders are financially healthy and avoid living in debt, Sun said.

Consumers can contact a nonprofit credit counseling agency — such as American Consumer Credit Counseling or the National Foundation for Credit Counseling — for help, she said.

3. Reduce your interest rate

Cardholders can contact their credit card provider and ask if it’d be possible to reduce their interest rate, Sun said.

They can also consider transferring their balance to a card offering a 0% interest-rate promotion to help pay off their debt faster, Sun said.

They may also try to transfer their debt into a home equity line of credit (HELOC), which generally carries lower interest rates though may take a month or so to establish with a lender, Sun said. She also recommends working with a financial advisor to analyze if this is a good move for you: A HELOC can pose problems, too, especially for consumers who continue to overspend.

Additionally, cardholders can determine if the taxes they’d pay on a retirement-account withdrawal would cost less than their credit-card interest rate, Jenkin said.

“It might make sense to let the tax tail wag the dog, pay the taxes, and then pay off your debt especially if you are at a 20%-plus interest rate,” Jenkin said.

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Trump administration loses appeal of DOGE Social Security restraining order

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A person holds a sign during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025. 

Nathan Layne | Reuters

The Trump administration’s appeal of a temporary restraining order blocking the so-called Department of Government Efficiency from accessing sensitive personal Social Security Administration data has been dismissed.

The U.S. Court of Appeals for the 4th Circuit on Tuesday dismissed the government’s appeal for lack of jurisdiction. The case will proceed in the district court. A motion for a preliminary injunction will be filed later this week, according to national legal organization Democracy Forward.

The temporary restraining order was issued on March 20 by federal Judge Ellen Lipton Hollander and blocks DOGE and related agents and employees from accessing agency systems that contain personally identifiable information.

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That includes information such as Social Security numbers, medical provider information and treatment records, employer and employee payment records, employee earnings, addresses, bank records, and tax information.

DOGE team members were also ordered to delete all nonanonymized personally identifiable information in their possession.

The plaintiffs include unions and retiree advocacy groups, namely the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the American Federation of Teachers. 

“We are pleased the 4th Circuit agreed to let this important case continue in district court,” Richard Fiesta, executive director of the Alliance for Retired Americans, said in a written statement. “Every American retiree must be able to trust that the Social Security Administration will protect their most sensitive and personal data from unwarranted disclosure.”

The Trump administration’s appeal ignored standard legal procedure, according to Democracy Forward. The administration’s efforts to halt the enforcement of the temporary restraining order have also been denied.

“The president will continue to seek all legal remedies available to ensure the will of the American people is executed,” Liz Huston, a White House spokesperson, said via email.

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The Social Security Administration did not respond to a request from CNBC for comment.

Immediately after the March 20 temporary restraining order was put in place, Social Security Administration Acting Commissioner Lee Dudek said in press interviews that he may have to shut down the agency since it “applies to almost all SSA employees.”

Dudek was admonished by Hollander, who called that assertion “inaccurate” and said the court order “expressly applies only to SSA employees working on the DOGE agenda.”

Dudek then said that the “clarifying guidance” issued by the court meant he would not shut down the agency. “SSA employees and their work will continue under the [temporary restraining order],” Dudek said in a March 21 statement.

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Most credit card users carry debt, pay over 20% interest: Fed report

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Many Americans are paying a hefty price for their credit card debt.

As a primary source of unsecured borrowing, 60% of credit cardholders carry debt from month to month, according to a new report by the Federal Reserve Bank of New York.

At the same time, credit card interest rates are “very high,” averaging 23% annually in 2023, the New York Fed found, also making credit cards one of the most expensive ways to borrow money.

“With the vast majority of the American public using credit cards for their purchases, the interest rate that is attached to these products is significant,” said Erica Sandberg, consumer finance expert at CardRates.com. “The more a debt costs, the more stress this puts on an already tight budget.”

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Most credit cards have a variable rate, which means there’s a direct connection to the Federal Reserve’s benchmark. And yet, credit card lenders set annual percentage rates well above the central bank’s key borrowing rate, currently targeted in a range between 4.25% to 4.5%, where it has been since December.

Following the Federal Reserve’s rate hike in 2022 and 2023, the average credit card rate rose from 16.34% to more than 20% today — a significant increase fueled by the Fed’s actions to combat inflation.

“Card issuers have determined what the market will bear and are comfortable within this range of interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

APRs will come down as the central bank reduces rates, but they will still only ease off extremely high levels. With just a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Schulz.

Credit card debt?

Despite the steep cost, consumers often turn to credit cards, in part because they are more accessible than other types of loans, Schulz said. 

In fact, credit cards are the No. 1 source of unsecured borrowing and Americans’ credit card tab continues to creep higher. In the last year, credit card debt rose to a record $1.21 trillion.

Because credit card lending is unsecured, it is also banks’ riskiest type of lending.

“Lenders adjust interest rates for two primary reasons: cost and risk,” CardRates’ Sandberg said.

The Federal Reserve Bank of New York’s research shows that credit card charge-offs averaged 3.96% of total balances between 2010 and 2023. That compares to only 0.46% and 0.43% for business loans and residential mortgages, respectively.

As a result, roughly 53% of banks’ annual default losses were due to credit card lending, according to the NY Fed research.

“When you offer a product to everyone you are assuming an awful lot of risk,” Schulz said.

Further, “when times get tough they get tough for most everybody,” he added. “That makes it much more challenging for card issuers.”

The best way to pay off debt

The best move for those struggling to pay down revolving credit card debt is to consolidate with a 0% balance transfer card, experts suggest.

“There is enormous competition in the credit card market,” Sandberg said. Because lenders are constantly trying to capture new cardholders, those 0% balance transfer credit card offers are still widely available.

Cards offering 12, 15 or even 24 months with no interest on transferred balances “are basically the best tool in your toolbelt when it comes to knocking down credit card debt,” Schulz said. “Not accruing interest for two years on a balance is pretty hard to argue with.”

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The 60/40 portfolio may no longer represent ‘true diversification’: Fink

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Andrew Ross Sorkin speaks with BlackRock CEO Larry Fink during the New York Times DealBook Summit in the Appel Room at the Jazz at Lincoln Center in New York City on Nov. 30, 2022.

Michael M. Santiago | Getty Images

It may be time to rethink the traditional 60/40 investment portfolio, according to BlackRock CEO Larry Fink.

In a new letter to investors, Fink writes the traditional allocation comprised of 60% stocks and 40% bonds that dates back to the 1950s “may no longer fully represent true diversification.”

“The future standard portfolio may look more like 50/30/20 — stocks, bonds and private assets like real estate, infrastructure and private credit.” Fink writes.

Most professional investors love to talk their book, and Fink is no exception. BlackRock has pursued several recent acquisitions — Global Infrastructure Partners, Preqin and HPS Investment Partners — with the goal of helping to increase investors’ access to private markets.

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The effort to make it easier to incorporate both public and private investments in a portfolio is analogous to index versus active investments in 2009, Fink said.

Those investment strategies that were then considered separately can now be blended easily at a low cost.

Fink hopes the same will eventually be said for public and private markets.

Yet shopping for private investments now can feel “a bit like buying a house in an unfamiliar neighborhood before Zillow existed, where finding accurate prices was difficult or impossible,” Fink writes.

60/40 portfolio still a ‘great starting point’

After both stocks and bonds saw declines in 2022, some analysts declared the 60/40 portfolio strategy dead. In 2024, however, such a balanced portfolio would have provided a return of about 14%.

“If you want to keep things very simple, the 60/40 portfolio or a target date fund is a great starting point,” said Amy Arnott, portfolio strategist at Morningstar.

If you’re willing to add more complexity, you could consider smaller positions in other asset classes like commodities, private equity or private debt, she said.

However, a 20% allocation in private assets is on the aggressive side, Arnott said.

The total value of private assets globally is about $14.3 trillion, while the public markets are worth about $247 trillion, she said.

For investors who want to keep their asset allocations in line with the market value of various asset classes, that would imply a weighting of about 6% instead of 20%, Arnott said.

Yet a 50/30/20 portfolio is a lot closer to how institutional investors have been allocating their portfolios for years, said Michael Rosen, chief investment officer at Angeles Investments.

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The 60/40 portfolio, which Rosen previously said reached its “expiration date,” hasn’t been used by his firm’s endowment and foundation clients for decades.

There’s a key reason why. Institutional investors need to guarantee a specific return, also while paying for expenses and beating inflation, Rosen said.

While a 50/30/20 allocation may help deliver “truly outsized returns” to the mass retail market, there’s also a “lot of baggage” that comes with that strategy, Rosen said.

There’s a lack of liquidity, which means those holdings aren’t as easily converted to cash, Rosen said.

What’s more, there’s generally a lack of transparency and significantly higher fees, he said.

Prospective investors should be prepared to commit for 10 years to private investments, Arnott said.

And they also need to be aware that measurement issues with asset classes like private equity means past performance data may not be as reliable, she said.

For the average person, the most likely path toward tapping into private equity will be part of a 401(k) plan, Arnott said. So far, not a lot of companies have added private equity to their 401(k) offerings, but that could change, she said.

“We will probably see more plan sponsors adding private equity options to their lineups going forward,” Arnott said.

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