Personal Finance

Hard Truth: Baby Boomers 'Had It All' But Are Now Drowning in Debt

David Beren

Published: March 11, 2025 12:21 pm

In many ways and for many reasons, baby boomers have been some of the most successful people we know. As a result, the largest transfer of wealth in history is happening now and into the future, from baby boomers to younger generations. This large wealth transfer begs the question of how any baby boomers can be in debt.  

The reality is that just because a whole generation is labeled as wealthy doesn’t mean this is always the case. In the same regard, some once-wealthy baby boomers may have seen their wealth dissipate for various reasons, including medical expenses and poor retirement planning. 

How Much Debt? 

According to Experian, the total debt of all baby boomers at the end of 2024 was $4.5 trillion. This would make the average debt per boomer approximately $94,880, which is a not-so-insignificant number. However, what’s more concerning about this number is not just the debt but also the idea that boomers carry an average mortgage debt of $188,034 (according to Scholaroo) and approximately $25,812 in credit card debt. 

While you can overlook the mortgage number as not “bad debt,” it’s still debt, and given rising housing expenses, including insurance premiums and taxes, everything is starting to add up in a significant way. According to Frank Legan, partner at Cedar Brook Group, boomers may have mortgage debt for a “strategic reason” as he says “When mortgages were at all-time lows, they were savvy and took advantage.” 

Legan advises that for baby boomers who can afford to pay off their mortgage, the advantage of doing so is welcomed so they don’t have to keep carrying this debt into their later years. 

Credit Card Debt

With this shocking number above $25,812 of credit card debt, on average, per baby boomer, many boomers have found themselves unable to get out. The higher the interest rate, the more difficult it is to get out of this debt, and it just increases their overall debt size. 

Ideally, baby boomers should try the snowball method by paying off the credit card with the lowest balances first and work their way up, or “snowball,” toward the cards with the largest debt. By doing so, this systematic approach can lift the boomer burden of credit card debt. Unfortunately, some baby boomers are unlikely to ever get out of credit card debt, which will significantly impact their retirement. 

Medical Expenses

The Kaiser Family Foundation estimates that healthcare costs have increased almost 160% since 2000, so medical debt significantly impacts baby boomers. 

According to Fidelity, the average out-of-pocket healthcare cost for a 65-year-old couple during retirement will total approximately $315,000. This is a sizable amount of money, and it could be a good chunk of a baby boomer’s retirement fund, which means they will need to go into debt elsewhere after paying for medical bills. 

Unfortunately, Medicare will only likely cover around 60% of all healthcare costs while retired. Long-term healthcare, like a nursing home, can cost more than $100,000 annually, and this all comes out of the baby boomer’s pocket. Given that as many as 48% of baby boomers don’t have long-term health insurance coverage, it stands to reason that they have to pay out-of-pocket, which is just sinking this generation deeper into debt. 

Supporting Adult Children

A study by Merrill Lynch estimates that around 79% of parents provided financial support to adult children in 2024. On average, around $7,000 will change hands annually for parents who want to help their children with small bills and expenses, but things can get even more drastic. 

Millions of baby boomers provide their children with financial assistance with housing, living expenses, and college tuition. Since 2020 and the pandemic, the job market has been challenging, and the number of baby boomers helping adult children has only increased. The result is that boomers are draining their savings to ensure their children are in a good place. 

What’s worse, many baby boomers have co-signed auto loans or mortgages for children, which puts their credit at risk if the child defaults. Of course, you also have the “boomerang effect,” as children return home due to financial stress and increasing household expenses for baby boomers. 

Bankrate suspects as many as 43% of parents have in some way sacrificed their retirement savings to help adult children, which only translates to not paying their debts, which continue to accumulate. 

Insufficient Retirement Planning

Arguably, the most critical reason baby boomers struggle is insufficient retirement planning. Many are nearing or at retirement age, but they don’t have enough money set aside to feel financially secure enough to stop working altogether. 

One concern is that too many baby boomers rely on Social Security as their primary income, and it’s only designed to replace as much as 40% of annual income while working full-time. Add to this the notion that too many baby boomers saw a lot of their financial savings hurt during the 2008 financial crisis and then again during the pandemic, which means their savings have not yet completely recovered. 

According to the US Census Bureau, the median retirement savings for boomer households are far below what financial advisors would recommend. This is reflected in the fact that 51% of baby boomers, per Kiplinger, have less than $100,000 saved for retirement. 

Debt Management Strategy 

The good news for millions of baby boomers stuck in debt is that all hope isn’t lost as there are a few ways to get started digging themselves out. 

Pay Off Credit Card Debt

Millions of baby boomers need to get started by paying off credit card debt first. As stated earlier, using a strategy like the snowball method is one of the best ways to find some immediate relief. It’s safe to say that baby boomers will find some immediate relief once their credit cards are no longer a financial concern. 

Debt Consolidation 

While debt consolidation might be more of a last resort, it can and should be considered. If a baby boomer is truly under water with no hope, combining medical debts into a single loan with a lower interest rate might be the saving grace. There is no question that it can impact a credit report, but baby boomers are arguably less worried about this than millennials or Gen Xers. 

Financial Counseling 

The smartest strategy for baby boomers in debt is to talk to a professional, specifically a qualified and registered financial counselor. This is someone who specializes in helping people of all ages get out of debt, and they can help create personalized debt management plans. Someone in this role can negotiate with creditors on a boomer’s behalf to help lower interest rates and maybe even waive some outstanding fees. 

Lifestyle Adjustments 

As hard as it might be, any baby boomer drowning in debt should definitely make significant lifestyle adjustments. These could be as simple as canceling unused streaming services or spending more time cooking at home than eating out.

Of course, these adjustments could also be much larger, such as selling a larger home with a hefty mortgage in favor of something smaller, both mortgage-wise and space-wise. There is also the consideration of relocating somewhere with a lower cost of living, which could immediately lift some financial burden.