Did you always think you’d be debt free by your 50s? Are you surprised that you’re not? You’re not alone. According to the federal government's Survey of Consumer Finances, in 2019, median debt among Americans ages 45 and older ranged from $108,000 for those 45–54, to $29,000 for those 70 and up.

Your 40s can be expensive years. You may be paying down a mortgage, maintaining a home, or saving for retirement and your children’s education—not to mention keeping up with everyday expenses. On top of this, you may have hit some bumps along the financial road. A job loss, divorce, an illness, or death in the family can all make it difficult to get ahead.

Now factor in the effects of the pandemic, market volatility, historically high inflation, and rising interest rates. Is it any wonder that many people in their 50s are struggling with debt?

The good news is that there may be some helpful steps you can take over the next 5 to 10 years such as considering changes to how you structure and manage your debt.

Strategies to reduce your debt

Consolidate debt—People in their 50s may have more than one type of debt. By consolidating your debt, you may be able to find a lower interest rate and pay it down sooner. One option for debt consolidation is the all-in-one account, which allows you to combine your mortgage, personal lines of credit, and any other debts you may have at a competitive interest rate.

Evaluate the price versus the cost of big-ticket items—Some people don’t fully understand how much debt costs. Different types of debt can carry widely different interest rates. For example, credit card debt is typically among the most expensive and can have an interest rate of 20% or more. On the other hand, secured debt, such as a mortgage, usually has a much lower rate of interest. But as you’ve probably noticed, even mortgage rates are jumping quickly.

It’s important to understand how much different forms of financing really cost and how much extra in interest costs you may end up paying on top of the price you pay for big-ticket items. For example, your winter vacation may cost $6,000, but if you put it on your credit card at 18% or 20% and don’t pay it off for six months or a year, you could end up paying hundreds interest. This example may not be reflective of your situation and individual circumstances will vary.

Consider downsizing early—Do you feel house rich and cash poor? If your children have left home and you no longer need the extra space, tyou may want to consider moving to a smaller home. Downsizing could save you money in interest, property taxes, and maintenance costs. This, in turn, could free up cash to pay down debt and to save for retirement.

Get some guidance—A financial professonal or employee financial wellness program can help you create a plan for controlling or getting out of debt. In fact, most retirement plan participants who receive guidance from either or both of these sources say that they’re able to make debt payments early, their retirements savings are on track or ahead, and their financial situation is good or excellent.¹

Need some help managing your debt? A licensed financial professional, your employer, and John Hancock can help you put strategies in place to address the challenges you may be facing in the years leading up to retirement.

1 In August 2021, John Hancock commissioned our eighth annual financial stress survey with the respected research firm Greenwald & Associates. An online survey of 1,162 John Hancock plan participants was conducted between 8/04/21 and 9/03/21 to learn more about individual stress levels, their causes and effects, and strategies for relief. John Hancock and Greenwald & Associates are not affiliated, and neither is responsible for the liabilities of the other.