How retirees can avoid going into debt from holiday shopping

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A recent holiday shopping survey from the Harris Poll, conducted for the American Institute of CPAs, offered an early look at how Americans are preparing for the season. The findings showed that many people who plan to spend on gifts and travel are already bracing for cutbacks, higher debt, and the emotional strain that comes with overspending.

In fact, nearly half of holiday shoppers expect to go into debt this year, according to the survey.

For retirees living on a fixed income, that raises an important question: What’s the single most important step they should take before the holiday season begins?

The real key is setting a holiday spending number before the season begins, said Cary Sinnett, senior manager of personal financial planning at the Association of International Certified Professional Accountants (AICPA).

It might be too late to do that for this year’s holiday shopping season. But it’s not too early to plan for next year’s holiday budget.

“For retirees, advance planning is essential,” Sinnett said on a recent episode of Decoding Retirement. “Start setting aside a little bit each week or each month or each paycheck as it comes in.”

A good rule of thumb, he said, is to limit holiday spending to a small percentage of annual income. About 1% or 2% is a reasonable starting point. “It doesn’t sound like a lot,” he said, “but there are good alternatives to how we can stretch those dollars.”

Dan Snyder, director of personal financial planning at the AICPA, said it helps to consider the peace of mind that comes with entering the holiday season knowing you won’t be in debt.

Read more: Holiday budget guide: How to save money and avoid debt this year

Sinnett added that retirees generally fall into two groups: those who have enough savings to comfortably handle holiday spending and those who borrow to create meaningful experiences.

“The crushing nature of debt, while you have normal everyday expenses going up, can be pretty tough,” he said.

Families should also have meaningful conversations about values when it comes to gift-giving. Spending time together and having quality conversations, Snyder said, “are the things that I remember much more than the big chemistry set that grandma got me.”

People walk among vendors at a Christmas market in Dupont Circle in Washington, DC, December 10, 2025. (Photo by SAUL LOEB / AFP via Getty Images) · SAUL LOEB via Getty Images

Sinnett concurred, noting that experiences often align more closely with the underlying reasons we give. He also pointed to a divide in the Harris Poll showing that younger Americans are more likely to overspend, and that retirees can model more meaningful holiday traditions.

Gifts, he added, are really about appreciation, connection, and relationships — none of which require a high price tag.

The Harris survey found that 79% of shoppers use credit cards, and 52% don’t pay off the balance.

The best scenario is to avoid credit entirely by saving in advance. However, if retirees need to use credit, Sinnett advised choosing a low-interest card or one with strong rewards.

For those who must use credit, he suggested setting your card to autopay, either for the full balance or a fixed amount within your budget. Using one low-interest card for holiday purchases is also a good idea, he said, so purchases are easier to track and pay off.

Read more: How to save on holiday trip costs using rewards credit cards

Sinnett also recommended avoiding deferred-interest promotions, which can lead to unexpected debt months later.

Locals and tourists enjoy an evening in the festively lit old town and at the Christmas market in Rothenburg ob der Tauber, in Rothenburg ob der Tauber, Ansbach, Middle Franconia, Bavaria, Germany, on December 7, 2025. The town is well known for its well-preserved medieval old town, a destination for tourists from around the world. It is part of the popular Romantic Road through southern Germany. (Photo by Michael Nguyen/NurPhoto via Getty Images) · NurPhoto via Getty Images

Even with these precautions, spending more than you planned can take an emotional toll: The Harris Poll found that 39% of shoppers reported feeling regret about overspending.

Sinnett said retirees can avoid this by pausing before making a purchase. He shared the story of an aunt who froze her credit cards in a cup of water — a simple way to add friction and curb impulse spending.

Retirees should make a list that includes who the gift is for, what it is, and why they want to buy it, he said. Connecting to the “why” can help reduce emotional, last-minute purchases.

How retirees can avoid going into debt from holiday shopping

The survey also found that 25% of respondents cite rising everyday expenses as a barrier to holiday spending.

Snyder noted that many people aren’t aware of their real expenses, which can lead to debt creep. Rather than calling it a budget, he prefers the term “spending plan.”

Read more: 6 creative holiday savings tips to keep your budget in check this year

Retirees should give themselves permission to spend, he said, but to do it intentionally.

Sinnett recommended using a monthly spending plan, online tools like YNAB and Monarch, or bank budgeting features to track expenses. He warned that buy now, pay later options are a red flag because they rely on tomorrow’s income to cover today’s spending — something that can backfire if unexpected events disrupt cash flow.

Two other practical tips retirees can use are to turn off one-click shopping and unlink saved credit cards, to add friction between seeing and buying.

“If you’re concerned about that unconscious spending … just add an extra layer,” Sinnett said.

Got questions about retirement? Email Robert Powell at yfpodcast@yahooinc.com, and we’ll do our best to answer it in a future episode of Decoding Retirement.

Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service.

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