If you’re worried about having enough money for retirement, you’re not alone. High-interest debt and economic disruptions, such as inflation and a weak job market, are making it harder for many people to pay for everyday expenses, let alone save for their future.
If debt is preventing you from saving for retirement, a personal loan may help you reduce or eliminate it more quickly, allowing you to start preparing for a stress-free retirement.
Why retirement readiness is out of reach for many Americans
Many Americans aren’t saving enough for retirement. For those starting late, the challenge of saving enough may seem daunting, considering other financial obligations and economic disruptions beyond their control.
The growing retirement savings gap
Many Americans have less than the recommended amount saved for retirement. To retire comfortably, most experts say you’ll need about six times your annual salary by age 50 and 10 times that amount by age 67.
Using this rule, someone earning $150,000 at age 50 would need to have saved $900,000 to be considered “on track.” Sadly, many are behind the recommended savings goal at this stage. Federal Reserve data says the median retirement savings for Americans aged 55 to 64 is just $185,000.
So it comes as no surprise that more than half of Gen X’ers—the generation set to retire next—believe they will not be financially prepared for retirement when the time comes, according to a recent Northwestern Mutual survey.
Putting aside enough money to retire can be tough, especially if you start late. Economic problems, like job losses or costly unexpected expenses, also make it harder to save consistently and catch up.
High-interest debt: A hidden barrier to retirement
One of the most significant obstacles hindering Americans from saving adequately for retirement is high-interest debt from credit cards, medical bills, and other loans. These types of debt come with consistently high rates, which can consume a substantial portion of your income and leave less money available to put toward retirement savings. In fact, research from the Transamerica Center for Retirement Studies states that 53% of workers of all ages say that debt is interfering with their ability to save for retirement.
Beyond the direct financial impact of delayed saving, there’s an emotional toll associated with carrying high-interest debt. The constant pressure of juggling debt, your daily budget, and family needs is mentally taxing and a psychological trigger for many.
Having a retirement catch-up plan in place, like the one we discuss below, can help you alleviate emotional and financial stress now and for years to come.
What is a retirement catch-up plan—and why you need one
A retirement catch-up plan is a strategy designed to help you save more for retirement, particularly if you started late or experience setbacks.
The concept of "catching up" financially
To support individuals who may start saving for retirement later or experience periods when they cannot save as much as they would like, the IRS allows those aged 50 and older to make catch-up contributions to specific retirement savings plans, including 401(k) plans and IRAs.
In 2025, you can contribute up to $23,500 each year to your 401(k). However, those age 50 and older can contribute an additional $7,500 to help boost their savings. For IRAs, the regular contribution is $7,000, plus an additional catch-up contribution of $1,000 for those 50 and older.
Even if you’re not yet eligible to make catch-up contributions, it’s essential to prioritize eliminating high-interest debt now so you can free up more funds to maximize contributions as much as possible later.
Creating space to save more
Managing high-interest debt leaves little room in your budget for making meaningful contributions to retirement savings. But once you eliminate or reduce these payments, you can redirect the funds to more productive financial goals.
Even better, reducing your debt burden can act as a launchpad for implementing smarter money management strategies once you have more room in your budget. When debt no longer competes with your goals, you can double down on recommended saving strategies, such as automating transfers to investment accounts or exploring other investment opportunities you wouldn’t have been able to consider before.
How a personal loan can help you eliminate debt faster
Reducing and eliminating high-interest debt doesn’t just create financial stability; it also helps set you on a path toward financial freedom, allowing you to allocate more resources to retirement.
The debt consolidation advantage
A personal loan for debt consolidation rolls multiple debt payments into one. Instead of submitting multiple payments to different companies, you make a single payment to the personal loan lender.
These loans also come with a fixed interest rate and a set term. This gives you a level of predictability that’s often lacking with credit cards, where interest rates can fluctuate, and minimum payments can vary based on the outstanding balance.
Comparing interest rates: Credit cards vs. personal loans
Personal loans (like BHG’s) offer low, fixed rates for qualified borrowers. The average credit card annual percentage rate (APR) is typically more than 20%, according to Federal Reserve data. In contrast, personal loan APRs are usually much lower, especially if you have good credit. Refinancing to a loan with a rate that’s even one percent lower can result in significant savings over the life of the loan.
Real impact: How this strategy saves you money
If you have several high-interest variable-rate balances across multiple credit cards, you’re likely paying hundreds of dollars in interest each month. If you get a personal loan to consolidate those debts, you could secure a much lower interest rate. This lowers your monthly payments and your total interest, making it easier to pay off debt faster.