High debt is changing retirement from fun to stressful
Retirement—the “golden years.” Free of the confines of obligations such as employment and raising children, retirement is that period of life when you get to treat yourself. You can travel the world, explore new hobbies, visit all your friends and extended family, or maybe even pursue that long-desired degree or technical skill. All it takes is money.
However, the retirement generation today is finding itself burdened by significant debt. For many the long-cherished dream of the paid-off mortgage remains just that—a dream. Instead of burning the mortgage note, retirees are carrying that note with them into their retirement years. In fact, according to a Consumer Finance Protection Bureau report, mortgage debt, combined with credit card, student loan and auto debt, is threatening the security of millions of senior Americans. More money going to service debt means less money for traveling and starting all those fun projects you dreamed about.
Five easy tips to help you enter your retirement years without the stress of debt
1. Write a budget for retirement
Honestly assess your current financial situation. Prepare an accurate income and expense statement. Dream about your retirement—what do you want to do? How much will it cost? When do you want to start? Will you have enough funds to carry you through the length of your retirement years? Plan early and put as much money as you can toward your retirement savings accounts as possible. Be sure to factor in unexpected medical expenses. Take maximum advantage of your employer-funded retirement package.
2. Make paying off your credit card debt a priority
You do not want to carry credit card debt into your retirement when your income is fixed. Try to make more than the minimum payment. If your credit card debt is beyond your cash flow means, apply for a credit card consolidation loan from a peer to peer lender. Peer to peer lenders, or online lending platforms, are especially designed for consumers like you who find themselves overwhelmed by multiple credit card bills. P2P lenders will help you quickly become debt-free. A credit card consolidation loan from one of these lenders will leave you with a manageable, single monthly payment, automatically deducted from your bank account, with easy and fair interest rates, no hidden fees or rules and, if circumstances change, you can pay off the loan early without penalty.
3. Pay down your mortgage early if possible
Taking your mortgage into retirement is troublesome because one never knows when the economy will change. It would be terrible for you to lose your home. It may be more advisable to put less into your retirement accounts now and instead focus on accelerating your mortgage payments.
4. Delay retirement in order to increase cash flow so that you can bring unsecured debt under control and increase your retirement savings
As long as you are healthy and have the energy, keep working at your current job. If this is not an option, start a new job. Perhaps add on a second job that could become a freelance project that you continue even in retirement.
5. Say no to children and grandchildren
This one is tough, but many retirees are finding themselves stretched not just by their own debt, but also debt they have assumed on behalf of their children and/or grandchildren, principally student loan debt. In fact, according to financial experts, student loan debt ranks second on the list of debt facing retirees, and in the majority of cases, these loans are for the benefit of their children or grandchildren. If you have the cash flow, have paid off your credit card and mortgage debt, and have sufficient savings for your retirement, and you want to help out the kids, great. Remember they have many decades to cover their debt and expenses, you do not.
With careful and early planning, strict budgeting and attention to debt-reduction, you should be able to sail into your retirement life free of stress with nothing but good choices before you.
