Among baby boomers who have a strategy for collecting Social Security, the most frequently selected triggers for planning were:

  • Concern about whether savings will provide enough income in retirement – 44 percent
  • Need to decide on my retirement age – 42 percent

Source: "How much will I get?" Securian Financial Group, 2013

What's new

May 2013

Debt torpedoes retirement expectations

  Are you bringing too much debt into retirement?
   

Conventional wisdom says it’s best to enter retirement with no debt of any kind – not even a mortgage. But half (40%) of the retirees surveyed by Securian Financial Group last month say they carried debt into retirement. Of those, more than half (55%) carried $25,000 or more. More than one-fifth (21%) held $100,000 or more in debt at retirement.

“These numbers are troubling,” says Michelle Hall, manager, Market Research, Securian Financial Group, whose team coordinated the survey, Retirement Time Bomb: Mortgage Debt. “For retirees on fixed incomes, debt payments are extremely burdensome and become more so as the cost of living rises.”

Boomer mortgage debt soars

Perhaps the most dramatic finding of the 2013 study is that the percentage of pre-retirees who expect to carry mortgage debt into retirement rose a stunning 123 percent since the last survey Securian conducted. More than 67 percent of boomers currently expect to carry mortgage debt into retirement, compared to 30 percent in the 2007 and 2009 surveys.

“Mortgage debt is a dark cloud over pre-retirees’ financial futures,” Hall continues. “Before the Great Recession, they may have expected to sell their homes at a profit and add it to their retirement nest eggs. Years of home devaluations and high unemployment dramatically changed many boomers’ financial plans.”

Forty-six percent of the pre-retirees in the Securian survey said they expect to carry various types of debt into retirement. Nearly half (48%) expect their debt to equal or exceed their savings at retirement.

A bright spot

On the brighter side, fewer retirees in the 2013 survey had carried debt into retirement. Just under half of the 526 retirees (49 percent) carried any kind of debt when they retired compared to 71 percent in the 2007 survey and 67 percent in 2009. About one-third (32%) of the retirees said they incurred debt after retiring. Nonetheless, more than half (53%) said debt is “something you should avoid if at all possible.”


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