As retirement approaches, many people focus on building their savings and securing their financial future.

However, one often overlooked risk is the presence of debt during retirement.

While debt can be manageable during your working years, it can become a significant burden once you're living on a fixed income.

1. Why Debt Becomes a Bigger Problem in Retirement

Debt in retirement can take many forms—credit card balances, mortgages, car loans, student loans, and medical debt, among others. While working, it's easier to manage these obligations with a steady paycheck. But once that paycheck disappears, relying on a fixed income, the burden of paying off debt becomes much harder.

The typical sources of retirement income—Social Security, pensions, or withdrawals from retirement savings are usually modest, and when you still have outstanding debts, a large portion of that income goes toward servicing those debts. This leaves less money available for essential expenses, such as healthcare, housing, and daily living costs.

2. The Types of Debt That Pose the Most Risk in Retirement

Not all debts are created equal. Some types of debt can be more damaging to your retirement finances than others. Here are some of the most common culprits:

Credit Card Debt: Often the most expensive debt due to high interest rates, credit card debt can quickly spiral out of control. The compounding effect of interest means you can end up paying far more than the original balance, making it harder to pay down over time.

Mortgages: While mortgages can be manageable during your working years, they can become an unnecessary burden in retirement, especially if you're carrying a significant loan balance or have high monthly payments.

Student Loan Debt: Student loans may not disappear in retirement, and this type of debt can significantly reduce your disposable income, particularly for those who are still paying loans taken out for their children or even their own education.

Medical Debt: Healthcare expenses can skyrocket in retirement, and if you don't have adequate insurance or savings to cover these costs, medical debt can become a huge financial burden.

3. The Consequences of Carrying Debt in Retirement

The hidden risks of carrying debt into retirement go beyond financial strain. Here are a few key consequences retirees may face:

Reduced Quality of Life: High debt payments can force retirees to cut back on essential expenses, such as healthcare, leisure activities, or even food. This can lead to a lower quality of life and increased stress.

Delayed Retirement Goals: Instead of enjoying retirement or traveling the world, you may be forced to continue working longer or living frugally just to manage debt payments.

Limited Flexibility in Emergencies: When emergencies arise—such as health issues, home repairs, or unanticipated expenses—a lack of available funds due to high debt payments can leave retirees financially vulnerable.

4. How to Eliminate Debt Before Retirement

The good news is that debt doesn't have to follow you into retirement. Here are several strategies to help you eliminate it:

Pay Down High-Interest Debt First: Start by focusing on your highest-interest debts, such as credit card balances or personal loans. Use the debt avalanche method to pay off these debts first, while making minimum payments on your other obligations.

Refinance Your Mortgage: If you're still carrying a mortgage, consider refinancing to a lower interest rate or extending the loan term to reduce monthly payments. This can make your mortgage more manageable in retirement.

Consolidate Loans: For individuals with multiple loans, consolidating them into one payment with a lower interest rate can simplify your finances and help you pay off debt faster.

Sell Unneeded Assets: If you have valuable items around the house—such as a second car or expensive collectibles—consider selling them to pay off debt. The proceeds can help reduce your debt load and free up more cash for retirement.

5. The Importance of Building an Emergency Fund

One of the best ways to avoid accumulating more debt during retirement is to have a robust emergency fund. Unforeseen expenses, such as medical bills or home repairs, are inevitable, and having savings set aside can prevent you from having to rely on credit cards or loans to cover these costs.

6. Seek Professional Help for Debt Management

If your debt situation feels overwhelming, seeking professional help can be a game-changer. Credit counselors, financial planners, or debt management companies can assist you in developing a debt repayment plan that fits your financial situation. Look for professionals who specialize in retirement planning and debt management to ensure they understand the unique challenges retirees face.

As Olivia S. Mitchell has emphasized, financial literacy and planning—including paying down high-cost debt—are essential as people live longer.

The hidden risk of debt in retirement is real, but it's not inevitable. By taking proactive steps now—such as eliminating high-interest debt, refinancing loans, and building an emergency fund—you can enjoy a more secure and fulfilling retirement without the burden of financial stress.