US Consumers Cite Credit Card, Medical Debt as Common Culprits Delaying Retirement

Credit card debt is the most likely form of regular payments to negatively impact people’s retirement preparation, according to a consumer sentiment survey of American consumers by ScoreSense, a credit score and monitoring provider. The survey revealed that credit card debt (30%) was the leading type of debt that respondents said could delay their retirement, followed by medical debt (29%).

Mortgage loans (26%), personal loans (18%), car loans (16%), student loans for children (15%) and student loans for the respondent or their spouse (12%) were other categories from which respondents chose. Additionally, 30% said “none of the above” choices could delay their retirement.

ScoreSense fielded responses from 600 U.S. consumers between the ages of 40 and 79 who have yet to retire.

According to the survey, respondents aged 70 through 79 attributed their delay in retiring to credit card debt (29%), mortgage loans (28%) and medical debt (27%). To boost retirement savings, one out of every three respondents took a second job or side gig, which occurred across all age groups.

Inflation, combined with the higher cost of borrowing, is certainly affecting retirement plans, according to the credit monitoring firm. ScoreSense noted in a September post that ongoing inflation means people are paying significantly more now, as compared with one year ago, to purchase the same items. At the same time, the Fed continues to raise interest rates in an effort to combat inflation—meaning people are paying more to use their credit cards.

“High interest rates continue to deter consumers from applying for and opening credit accounts,” the report stated. “While credit balances remain high as consumers struggle to pay off their credit cards, there is less credit usage compared to last year as consumers are tightening their spending habits.”

Based on the consumer sentiment survey, only 30% of respondents believe they will retire on time, and 18% think they will retire later than age 67. Additionally, the report found 40% of respondents did not know the approximate balance of their retirement accounts.

“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,” Carlos Medina, senior vice president at One Technologies LLC, which offers ScoreSense to employees, said in a statement. “What I find disturbing from our survey is the large number of people who don’t know what they have or what it will take to retire. While it’s never too late to save for anyone, young people need to create retirement savings accounts that can really blossom over time.”

Respondents said Social Security (65%) is the leading method to fund their retirement, followed by savings in a bank account (44%). Those aged 70 through 79 were significantly more likely to include stock and bond investments to save for retirement compared to other groups. Meanwhile, those aged 40 through 49 relied more heavily on a 401(k) account than other age groups.

Roughly seven out of every 10 respondents had a 401(k) with an employer, and 56% said their employer matched a percentage of their contributions. More than 60% of people are still contributing to their accounts, while one-quarter reported increasing their contributions within the past 12 months.

For those with no employer-provided retirement account, who had an individual retirement account or an independent 401(k) account, only 29% reported contributing to their accounts, and 43% said they have stopped contributing to their accounts, as compared with 12% in employer-provided 401(k) plans.

In addition to delaying retirement savings, consumers are missing credit card payments as well. The number of delinquent credit accounts—defined as past due for more than 30 days—reached a three-year high, jumping up by 10% year-over-year in Q3 2023 from Q2 2023, ScoreSense found.