Holiday spending and credit card debt

Holiday debt can have a lasting impact on retirement saving, but financial wellness tools and planning ahead may help.

Holiday debt is fairly common

It’s easy to go overboard during the holidays. More than three in ten U.S. adults say they typically accrue debt during the holiday season.1 Some people like to save their money, while others like to spend it. Those with credit card debt are more likely to self-identify as spenders, and, for these individuals, balancing the need to save with the desire to spend becomes even more difficult during the holiday season.2

Debt’s impact on retirement saving

Our research shows that many participants who carry credit card debt have seen their retirement saving suffer as a result. 62% of participants who currently have credit card debt say they’re saving less than they want to save for retirement as a result of that debt.3 For many, debt outweighs every other goal. 37% of participants who have credit card debt rank that debt as their top financial priority.4

The effects of compound interest

The average interest rate for credit card account holders is 15.10%.5 Compound interest causes credit card debt to grow and makes it more difficult for people with debt to get on track financially. The power of compound interest allows retirement plan savings to grow and makes it easier for plan participants to stay on track financially.

Planning ahead to avoid debt

People who plan ahead for their holiday shopping are less likely to take on credit card debt as a result of holiday-related purchases.6 This fits with other research we’ve seen. Those who are future-focused—demonstrated by activities such as envisioning retirement, setting financial goals, creating financial plans, and saving for emergencies—are more likely to have better financial outcomes.7

Financial wellness tools, such as Lincoln WellnessPATH®, can help participants set goals and save in advance for holiday shopping so they can avoid holiday debt and its lasting financial impact. Encourage participants to use financial wellness tools and plan ahead for expenses. Then they can give themselves the gift of retirement while giving presents to loved ones.

1 Lincoln Financial Focus: Goals and Reflections of Today’s Consumer, Year-end 2017 Study.

2 CivicScience: Data gathered from 1/1/2019 to 10/17/2019, with a sample of 29,663 respondents, ages 18+.

3 Lincoln Retirement Power® Participant Study, 2019.

4 Ibid.


6 CivicScience: Data gathered from 1/1/2019 to 10/17/2019, with a sample of 3,478 respondents, ages 18+.

7 Lincoln Retirement Power® Participant Study, 2019, and Lincoln Financial Focus: Goals and Reflections of the Modern Consumer, 2019.