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When retiring isn’t an option: 'I couldn't retire if I wanted to'

People just aren't prepared. According to a study on retirement confidence by the Employee Benefit Research Institute published last week, less than half of those surveyed have tried to calculate how much money they'll need in retirement, and 39% simply guess rather than doing a systematic analysis.

And it gets worse. Last month the New York Federal Reserve released a report that found that people over 50 are carrying more debt than they had in the past. It found that the debt held by younger borrowers dropped slightly from 2003 to 2015, whereas debt held by people between ages 50 and 80 spiked by 60% over the same period.

What types of borrowing play the largest role in the observed surge in debt at older ages? 

The average 65-year-old had $27,259 in mortgage debt (including a home equity line of credit, or HELOC) in 2003. By 2015, that figure climbed 47% to $40,000, according to NY Fed data. The same age group carried $2,973 in auto loan debt in 2003, and $3,830 in 2015 – a 29% increase. Credit card debt levels remained around the same for 60- and 65-year-olds – and even dropped moderately – between 2003 and 2015. Student loan debt increased among 65-year-olds over the same period.

Yahoo Finance took an informal survey of retirees and those close to retirement age in New York recently to get a sense of how they view their retirement prospects. Some people we spoke with were in comfortable financial situations, while others (who you can hear from in the video above) planned to work as long as they possibly could. Whether because of considerable mortgage debt or because they’ve exhausted their savings to pay for their children’s college education, retirement isn’t on the near horizon.

Michael Barry, a self-employed farmer on Long Island, says he plans on working as long as he can. “I love what I'm doing. So I really enjoy it. And as long as I'm healthy. I intend to continue,” Barry, 65, says. “The other reason is that I couldn't retire if I wanted to, financially.”

Debt – especially mortgage debt, often the most costly monthly expense – can stand as an obstacle between retiring and having to continue working. Indeed, according to the Fed’s 2014 Survey of Household Economics and Decision Making, about 31% of non-retiree respondents have no retirement savings or pension.

It’s important to note that debt isn’t always a negative, even for near-retirees. Most homeowners benefit from a mortgage interest deduction. But the value of the deduction may drop when you retire. You might be paying far less interest on your loan, which means a far smaller mortgage interest deduction. (Here’s a more detailed look at the pros and cons of retiring with debt.)

“We try to help our clients understand the math, but at the end of the day, the qualitative aspects tend to be more important to people. We’re not worried about debt if it’s done right,” says Brett Horowitz, CFP and wealth manager at Evensky & Katz in Coral Gables, Fla.

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