Retirement confidence, or the measure of a person’s belief that they will be able to live comfortably after the decline of their career, is at a worryingly low level.
According to the Pew Research Center, 40% of American adults do not feel confident that they have enough income and assets to last their entire retirement, or feel that they will not be able to retire, point (1).
Only about a quarter express great confidence in their retirement finances.
Even among older adults who are already retired or about to retire, confidence remains shaky. Less than half of people aged 60 to 70 feel very confident about their financial future, although that figure improves to 50% among people aged 80 and over.
The problem may not simply be insufficient savings. It could also be that excessive debt leads to a lack of preparation. Carrying high-interest obligations into retirement means 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 personal or credit card loans.
Student debt does not disappear at retirement age. According to Education Data, it takes the average borrower 20 years to pay off student loans (2). That means someone who borrowed at age 22 could still be making payments at age 42, already in their prime earning years, when retirement savings should take priority.
Federal college student loan interest stands at 6.39% for 2025-2026, the highest in 10 years. Postgraduate rates reach between 7.94% and 8.94%. Medical school graduates have an average debt of $199,220, while law graduates owe approximately $140,870 (2). These professional degree holders face decades of substantial monthly payments.
Alarmingly, 21% of borrowers’ balances increase during their first five years of repayment despite making payments. These extended deadlines mean less money for retirement contributions during crucial wealth-building years. Someone making monthly payments of $442 on almost $40,000 in student debt at 6.39% interest needs 10 years to reach a zero balance (2).
Vehicle financing has become expensive. According to Experian, average interest rates on new car loans hit 6.73% last year, with average monthly payments of $745. Used car buyers face even higher costs, with rates averaging 11.87% and monthly payments of $521 (3).
Credit scores greatly influence rates. Excellent credit of 78 or higher secures new car loans at around 5.18%, while poor credit between 300 and 500 faces up to 15.81%. For used cars, that gap widens from 6.82% to a staggering 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 totaling $41,720, Americans have substantial vehicle debt that drains retirement resources. A $40,000 car loan at 6.73% for six years means paying almost $9,000 in interest alone, money that could have grown in a retirement account.
Read more: The average net worth of Americans is a staggering $620,654. But it almost doesn’t mean anything. Here’s the number that counts (and how to make it fire)
Credit card debt represents the most dangerous threat to retirement security due to severe interest rates and revolving balances.
The Federal Reserve Bank of New York reports that credit card balances increased by $24 billion in the third quarter of 2025, reaching $1.23 trillion, up 5.75% from the previous year (4). According to data from the Federal Reserve, these balances accrue an average interest rate of 20.97% as of November 2025 (5).
Unlike mortgages or student loans, credit card debt offers no tax advantages or build equity. Having $5,000 in credit card debt at 20% interest costs $1,000 a year in interest alone, before the principal balance is reduced.
If future retirees can pay for these three things before they retire, they may feel more secure in their golden years.
Going 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 insufficient retirement funds and rising costs.
Research reveals stark disparities. Among low-income adults, 57% feel insecure about retirement finances compared to only 15% of higher-income adults. The debt burden prevents the accumulation of wealth, which widens this gap.
If you have these debts, consider these strategies to help pay them off:
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Target high-interest debt first: Use the avalanche method, which prioritizes credit cards, then auto loans, then student loans, depending on interest rates.
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Consolidate strategically: Personal loans with lower rates can consolidate credit card debt, reduce interest costs, and create fixed terms.
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Refinance when beneficial: Refinancing student loans and auto loans can lower rates for qualified borrowers, although federal student loans may offer protections that private loans do not.
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Seek professional guidance: Financial advisors can create individualized strategies that balance eliminating debt with saving for retirement.
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Pew Research Center (1); Educational Data Initiative (2); Experian (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.
