Retirement confidence, or a measure of a person’s belief that they will be able to live comfortably after their career sunsets, is disturbingly low.
According to the Pew Research Center, 40 percent of American adults do not believe they will have enough income and assets to last them through retirement, or feel they will not be able to retire, period (1).
Only a quarter express more confidence in their retirement finances.
Even among older adults who are already in or nearing retirement, confidence remains shaky. Less than half of people in their 60s and 70s feel very confident about their financial future, although this improves to 50 percent among those 80 and older.
The problem may not just be insufficient savings. It can also be excessive debt that leads to a lack of preparedness. Carrying high interest liabilities into retirement means that fixed income and savings are diverted to creditors instead of supporting your lifestyle.
Three types of debt deserve special attention: student loans, auto loans, and credit card or personal loans.
Student debt doesn’t disappear at retirement age. According to Education Statistics, it takes the average borrower 20 years to pay off their student loans (2). That means someone who took out a loan at age 22 could still be making payments at age 42 — well into their earning years when retirement savings should be prioritized.
Federal undergraduate student loan interest for 2025-2026 is 6.39%, the highest in 10 years. The graduate rate rose from 7.94% to 8.94%. Medical school graduates owe an average of $199,220, while law graduates owe about $140,870 (2). These professional degree holders face monthly payments for decades.
Alarmingly, 21% of borrowers who make payments still have their balances increase during the first five years of their repayments. These extended timelines mean less money for retirement contributions during key wealth-building years. Someone making monthly payments of $442 on approximately $40,000 in student loans at 6.39% interest would need 10 years to reach zero balance (2).
Vehicle financing has become expensive. According to Experian, the average new car loan interest rate reached 6.73 percent last year, with a monthly payment of $745. Used car buyers face even higher costs, with an average rate of 11.87% and a monthly payment of $521 (3).
Credit scores greatly affect rates. Excellent credit of 78 or higher secures a new car loan at around 5.18%, while poor credit between 300-500 is as high as 15.81%. For used cars, the difference increases from 6.82% to 21.58%.
The Federal Reserve reports auto loan balances of $1.66 trillion in the third quarter of 2025 (4). With average new car loans at $41,720, Americans have enough vehicle debt to deplete retirement resources. A $40,000 auto loan at 6.73% over six years means paying nearly $9,000 in interest alone, money that could have grown in a retirement account instead.
Read more: Americans’ average net worth is a staggering $620,654 But it makes almost no sense. Here’s the number that counts (and how to make it heavenly)
Credit card debt is one of the most dangerous threats to retirement security due to the high interest rates and punishing revolving balances.
The Federal Reserve Bank of New York reports that credit card balances increased by $24 billion in the third quarter of 2025, to $1.23 trillion – up 5.75 percent from last year (4). According to Federal Reserve data, these balances carry an average interest rate of 20.97 percent through November 2025 (5).
Unlike mortgages or student loans, credit card debt offers no tax benefits and builds no equity. Carrying $5,000 in credit card debt at 20% interest costs $1,000 a year, before your principal balance is reduced.
If potential retirees can pay off these three things before retirement, they can feel more secure in their golden years.
Back to the Pew Research survey, when younger adults were asked what worries them about aging, financial concerns ranked second only to health. Thirty percent cited concerns about inadequate retirement funds and rising costs.
Research has shown clear disparities. Among low-income adults, 57% feel uncertain about retirement finances compared to just 15% of high-income adults. Debt burdens prevent wealth accumulation, which widens the gap.
If you’re carrying these loans, consider these strategies to help clear them:
Target high-interest debt first: Use the avalanche method, which prioritizes credit cards, then auto loans, then student loans based on interest rates.
Strengthen strategically.: Personal loans with low rates can consolidate credit card debt, reduce interest costs and create a fixed timeline.
Refinance when beneficial.: Student loan and auto loan refinancing can lower rates for qualified borrowers, although federal student loans may offer protections that private loans do not.
Get professional guidance.: Financial advisors can create individualized strategies that balance debt elimination with retirement savings.
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Pew Research Center (1); Educational Data Initiative (2); experienced (3); FRBNY (4); FRBSL (5).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
