Overwhelmed by out-of-pocket medical costs, Valerie Towe and her husband, Paul, saw their debt load begin to swell last year.
Facing a steady stream of bills for 77-year-old Paul’s chronic obstructive pulmonary disease, rheumatoid arthritis, and neuropathy, Valerie began to tap credit cards to keep up.
“I wasn’t able to make ends meet,” Valerie, 65, told Yahoo Finance.
The cost of weekly groceries added to the strain — nearly doubling last year, she said. And to top it off, as her caregiving duties ramped up, Valerie shifted to a part-time job.
“When you’re a caregiver, you can’t work a full-time job,” she said.
The worst of it, as anyone who has rolled over credit card balances month to month knows, is the ballooning debt that accrues when you can only pay the minimum amount of the balance on credit cards that are ladened with interest rates topping 20%.
That’s all Valerie has been able to do, and the result is a gut-punching credit card debt nearing $30,000, she said.
Nearly half of adults 50 and older who carry credit card debt use credit cards to pay for basic living expenses, according to a new AARP report. And roughly 3 in 10 older adults with credit card debt have more of it than a year ago.
More sobering: Nearly half of them owe $5,000 or more, and 28% carry a balance of $10,000 or more.
That has serious repercussions for retirement savings.
“Many older Americans with credit card debt who hope to retire soon will have to make the difficult decision of whether to pay down debt or save for retirement,” Indira Venkat, senior vice president of research at AARP, told Yahoo Finance. “For those who have already retired and are living on a fixed income, it can be a challenge to both pay down a credit card and make ends meet.”
Read more: Best ways to pay off credit card debt
She’s right on that one. When people say what they regret the most after they retire, a biggie is retiring with too much debt.
In 2024, almost 7 in 10 retirees with debt reported having credit card debt outstanding, per a survey from the Employee Benefit Research Institute (EBRI). That’s up from 4 in 10 four years ago.
And while the rising cost of groceries, housing, and vehicles are the byproducts of sticky inflation, one of the biggest culprits of credit card debt is out-of-pocket medical costs such as prescription drugs, which the Towes are grappling with. Dental and vision care add up too, Venkat said.
If they could turn the clock back, nearly a quarter of retirees say they would have made paying down credit card and other debts a priority before they exited the workforce, according to a new Fidelity Investments report.
The emergence of credit card debt for older Americans is not fading away anytime soon. Roughly 1 in 5 expect to take more than five years to pay it off, per the AARP report.
The decision to pay down debt or save for retirement is a reality for many older Americans as they near retirement. More than half of those currently working say that their debt is interfering with their ability to save, a recent report by the Transamerica Center for Retirement Studies found.
Troubling, too, is that the debt has pushed them to tap into existing retirement savings. One in 3 workers has taken a loan, early withdrawal, or hardship withdrawal from their 401(k) or similar plan or IRA, per Transamerica.
Among those who have taken out a loan or withdrawn from their 401(k) or similar plan, the most frequently cited reasons are medical bills and paying off credit card debt.
More evidence: Last year, hardship withdrawals increased over 2023, with 4.8% of participants tapping their retirement savings, up from 3.6%, according to Vanguard Group, which administers 401(k)-type accounts for nearly 5 million people.
When you withdraw from a traditional 401(k) account, you get slapped with paying income tax, and typically a 10% penalty if you’re younger than 59 1⁄2.
Read more: What is the retirement age for Social Security, 401(k), and IRA withdrawals?
Here’s an easy first step: Call your credit card issuer and ask for a lower interest rate, pointing out — if true — your history of on-time payments.
If your provider won’t budge, shop for a 0% balance transfer card. You can shift your current high-cost credit card debt over to a new card with a 0% promotional rate lasting as long as 21 months. There is, however, a 3%-5% transfer fee of the total amount you transfer, but that long interest-free period will give you some space to begin to pay the balance down.
Automating your monthly payments and paying more than the minimum is the ticket to whittling away at your debts.
There are a few strategies to consider for reducing your overall debt. The avalanche method involves paying off debt with the highest interest rate first. Other people opt for the snowball method, which focuses on smaller debts first. I’m in the avalanche school, but whatever works best for you matters.
Alternatives also include consolidating all of your credit card debt with a personal loan. It’s possible to land an interest rate as low as about 7% over seven years if you have strong credit, which regrettably is not often the case if you’ve accumulated too much debt.
Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.
If you have multiple balances across several cards and a balance transfer card or personal loan won’t cover the total debt, I recommend tackling the highest annual interest rate first, while still making payments on the rest to steadily lower the interest charges.
A nonprofit credit counselor may also be able to negotiate with your credit card issuers to give you a break on rates, but you will pay a fee for the service. The Justice Department website provides a list of approved credit counseling agencies.
Read more: Best balance transfer credit cards of 2025
Other resources include AARP’s credit card pay-off calculator and the National Foundation for Credit Counseling.
Easier said than done, I know. As Valerie told me: “I’m stuck. I don’t know what I’m going to do… yet. I’m kind of in limbo with it.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “In Control at 50+: How to Succeed in the New World of Work” and “Never Too Old to Get Rich.” Follow her on Bluesky.
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