The Under-the-Radar Threat to Your Retirement

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March 11, 2025

Inflation, market volatility and health care costs often receive the lion’s share of attention as the foremost threats to your financial security in retirement. But there’s a lesser-recognized danger that could have a domino effect, hindering efforts to save and preventing would-be retirees from remaining on track.

According to a new AARP poll, 47% of adults ages 50 and older who carry credit card debt use credit cards to pay for basic living expenses that they don’t have enough money to cover. That trend is heading in a worrisome direction: The survey found that 37% of older adults have more credit card debt than a year ago, and 48% of older adults who carry a balance from month to month owe $5,000 or more.

When it comes to retirement planning, understanding good debt versus bad debt is invaluable. Paying your home off early is great if you don’t want to carry a mortgage into your golden years, but even at current rates, the debt on your home is carrying a far lower rate than the plastic in your wallet is.

From 2013 to 2024, the average credit card APR nearly doubled from 12.9% to 24.2%, reaching the highest level on record since the Federal Reserve began collecting that data in 1994. If you ask me, any debt accruing interest at 24.2% is categorically bad debt, even if it’s applied to just a $5,000 balance. 

The first step to remedying debilitating debt is to approach it like triage. Prioritizing your debts from the highest interest rates to the lowest is a pathway to being able to save more in the future. Otherwise, you risk becoming locked into a cycle of burdensome debt that could lead to financial insecurity as you approach retirement. 

— Jordan Chussler, investing and banking editor

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Annual home insurance premiums rose by a record $276 to $2,290 in 2024, and since 2019, those policies’ premiums have skyrocketed 61%. Costs are up across the board, but certain areas of the country are getting especially clobbered by the price hikes.

Traditional health insurance and Medicare often have limited coverage for long-term care. This means you or your loved ones could face substantial costs should you require in-home care or assisted living. Long-term care insurance may provide a crucial safety net by offering coverage for these services. However, it’s important to act early, as typically the likelihood of denial or policy limitations increases with age.

Check out Money’s list of the best long-term care insurance providers today.

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