62-Year-Old With Master's Degree Works as Retail Manager for £17/Hour, Too Scared To Retire

In a recent episode of Caleb Hammer's Financial Audit YouTube podcast, 62-year-old Ted said his financial situation around credit card debt makes him feel like he just started his career with no retirement life in sight.

Ted has a master's degree and works as a retail manager, earning £17 ($21) per hour. When Caleb highlighted that Ted has already reached an age where he can claim Social Security and begin withdrawing from tax-advantaged retirement accounts penalty-free, Ted acknowledged he is doing the opposite of what most people his age do.

Ted also highlighted that he doesn't desire retail management and that it's not his end game. He is among millions of older Americans carrying debt into their 60s, working jobs they don't like, and scared to retire because of inadequate retirement savings.

Elevated Living Costs Are Forcing Millions To Unretire

While Ted is unable to retire, given his debt and possibly inadequate savings, the sudden rise in living costs over the past two years is an added burden. The rising costs of essentials have compelled many US retirees to "unretire" because their Social Security checks and income from retirement savings aren't enough to pay the bills.

Pamela Shields from Texas retired when she was 59 due to a car accident, and she settled for £1,166 ($1,470) in monthly Social Security checks when she became eligible. However, unexpected medical costs and monthly bills forced her to unretire, working seven days a week to supplement her income. Shields even had to cash out her 401(k) prematurely to help her family sustain through multiple divorces.

The pandemic drove a record number of early retirements due to job losses, health issues, or financial concerns. Many claimed Social Security earlier than planned and were locked into lower monthly checks for life.

Meanwhile, market volatility and financial stress forced many to make unprofitable changes to their 401(k) plans, including cashing out their savings in fear of losing their hard-earned money to a recession.

Economic And Geopolitical Developments Point Towards An Upcoming Increase in Inflation

The US Federal Reserve's monetary tightening campaign drove inflation and living costs to record highs, a major reason that more retirees returned to the workforce. While inflation cooled in the latter half of 2024, it has started picking up and is expected to follow this trajectory in the near future.

Resilient economic indicators such as strong activity in the US services sector, a steep jump in the prices paid measure for service inputs in December and higher-than-anticipated US job openings in November could point to rising inflation and fewer rate cuts by the US Fed this year.

Meanwhile, several economists see President-elect Donald Trump's tariff plans also playing a role in lifting inflation, which the US Fed has been trying to tame for years. Elevated interest rates or an undesired interest-rate hike could make it even more challenging for people to repay or consolidate their debts.

Is A Debt Management Plan The Best Option For Ted?

Credit card debt appears to be a leading financial roadblock in Ted's journey to retirement, and there are several ways to tackle it. However, time is of the essence for Ted because he cannot waste any more years repaying exorbitant interest on debt, which could directly go towards his retirement funds.

He is forced to work a job he doesn't like and has few years to grow his egg nest if he manages to hang up his boots by the full retirement age (FRA), which is 67 for those born on or after 1960.

Budgeting and using the avalanche or snowball methods are standard ways to approach credit card debt. However, Ted could consider a debt management plan through credit relief agencies with the help of a certified credit counsellor who will negotiate lower interest rates, finance charges, and other potential waivers with his creditors.

The goal is to negotiate a monthly payment amount Ted can comfortably afford and save as much money as possible. Ted's payments will go to the plan's administrator, who will then distribute the money to the concerned creditors.

Although Ted might witness a drop in his credit score initially and cannot open new lines of credit during the tenure of the repayment plan, the strategy can significantly free up his budget, reduce payables, and help him contribute more towards retirement funds.