American retirees' credit card debt has surged! Inflation is the culprit.

Researchers have indicated that the percentage of Americans carrying credit card debt into retirement has significantly increased, posing a concerning financial trend, especially for those with little room in their budget. According to a recent survey from the Employee Benefit Research Institute (EBRI), by 2024, about 68% of American retirees will have unpaid credit card debt, a significant increase from 40% in 2022 and 43% in 2020. Bridget Bearden, an EBRI research strategist, stated after analyzing the survey data, "This is concerning for retirees living on fixed incomes." Bearden pointed out that inflation was the "real driver" behind the increased use of credit cards by American retirees. In fact, it's not just retirees. According to a recent survey by personal finance product information service company Bankrate, about one-fifth of credit card holders have reached or are close to reaching their credit card limit since early 2022 due to inflation and rising interest rates. Consumer prices in the US have been growing rapidly in recent years, largely due to supply and demand shocks during the pandemic. Bearden said, "If a substantial part of your Social Security income is now going towards rent, you have very little left for other basic expenses." Despite annual cost-of-living adjustments for Social Security beneficiaries to help keep up with inflation, data shows that these adjustments have not been sufficient. According to data from the nonprofit organization The Senior Citizens League, the purchasing power of Social Security beneficiaries has decreased by about 20% since 2010. Furthermore, researchers at the St. Louis Federal Reserve mentioned in a May analysis report that credit card interest rates are high and seen as an "expensive form of borrowing," and with rates rising to historic highs, credit cards will only become more expensive. According to Fed data, the average interest rate paid by consumers in August 2024 was 23%, higher than the approximately 17% in 2019. Even before the inflation spike during the pandemic, rising levels of debt were already a problem for American retirees. Another study published by EBRI in August showed that households nearing retirement or recently retired are more likely to be in debt and have higher levels of debt compared to previous generations. The report stated that more households are facing debt issues during their working years, which continue into retirement. In the August report, EBRI stated that in 2022, the typical household headed by someone aged 75 and older had $1,700 in credit card debt, while households headed by individuals aged 65 to 74 had $3,500 in credit card debt. Financial advisors suggest that retirees have several ways to manage their credit card debt, including reducing expenses, increasing income (considering reemployment, selling valuable items accumulated over the years), and contacting credit card providers to inquire about potential rate reductions.