Credit Card and Medical Debt Among Leading Causes for Retirement Delay
A consumer survey by ScoreSense asked workers about the top reasons they’re delaying retirement—finding that credit card debt is the leading cause.
According to the survey, only 30% of respondents think they will be able to retire on time, and 18% think they will retire after age 67. Credit card debt was the leading type of debt that respondents say would delay their retirement (30%), followed closely by medical debt (29%). This was particularly true for those ages 40 to 49, followed by individuals between the ages of 70 to 79.
The idea of a near recession, or at the very least, heightened inflation, has also stirred some to delay retirement. If a recession were to occur in the next two years, 40% of respondents said it would delay their retirement plans, with Generation X workers (ages 40 to 59) particularly noting a postponement. Additionally, 23% of respondents said they have lowered their retirement plan contributions in the last 12 months to cover higher household expenses due to inflation.
Alternatively, 30% of respondents have taken a second job or side gig to increase retirement savings. Downsizing a home (20%), moving to a different city or state (19%), or selling off assets (19%) were also cited, found ScoreSense. Those ages 60 to 79 were more likely to downsize their homes compared to those between 40 to 59.
“In the midst of a tough inflationary economy, it’s not surprising that many Americans are not where they want to be on their retirement goals,” said Carlos Medina, senior vice president at One Technologies, LLC, which offers ScoreSense.
Additional findings, as reported by ScoreSense, include:
- About 40% of respondents do not know the approximate balance of their retirement accounts. Approximately half only know how much they would need to comfortably retire. Thirty-seven percent of those between the ages of 50 to 59 were significantly less likely to know how much they would need to retire as compared to other age groups.
- To fund retirement, Social Security (65%) is the leading method followed by savings in a bank account (44%). Those ages 70 to 79 are significantly more likely to also include stock and bond investments as a method as compared to other groups. For those ages 40 to 49, a 401(k) account is more heavily relied upon as compared to other groups, while ages 60 to 69 have more mention of an individual retirement account (IRA) account as compared to other groups.
- 70% of respondents have a 401(k) with an employer, with 56% mentioning their employer matches a percentage of their contributions. Over 60% are still contributing to their accounts. One out of four respondents have increased contributions within the past 12 months.
- For those with an IRA or an independent 401(k) account only, only 29% are contributing to their accounts. This group also has more respondents (43%) who say they stopped contributing to their accounts as compared to those with an employer-provided 401(k) (12%).
SEE ALSO:
- Employees See Workplace Plans as ‘Key Vehicle’ for Retirement
- As High Inflation Enters Third Year, Americans Rethink Retirement
- COLA Conundrum: 80% of Retirees Want Better Inflation Protection
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
