Don't Let Debt Derail Your Retirement: 3 Ways to Pay It Off
Everyone shares a common goal when it comes to financial planning: securing their finances to maintain their desired standard of living. Debt is one of the primary obstacles to achieving this goal.
According to the State of Retirement Finances report from Clever Real Estate, approximately 71% of retirees in 2023 had an average debt of $19,888, excluding mortgages. This marks a 16% increase from the national average for retirees in 2022.
Here are some reasons why retirees accumulate debt:
-
Changing market conditions
-
Decline in savings
-
Mortgage debt
-
Car loan payments
-
Personal loan debt
-
Healthcare costs
-
Family obligations
-
Unexpected events
There are simple solutions to reduce debt before retirement, thereby minimizing its impact on your lifestyle:
Pay off High-Interest Debt First
Prioritize paying off debts with high-interest rates. Be cautious when using credit cards and ensure you have funds available to cover your monthly bill.
Consider Downsizing
Maintaining a large mortgage can be burdensome. Consider downsizing to a home more suitable for your lifestyle. Evaluate the advantages and disadvantages of paying off a lower rate mortgage. Paying off good debt with lower interest rates can result in less interest paid over the life of the loan, freeing up cash for other purposes or investments, and releasing assets for potential investment properties to accelerate wealth.
Build an Emergency Savings Fund
Having an emergency fund is crucial for covering unexpected expenses. Aim to have enough liquid cash to cover at least six months of necessary expenses to maintain your desired lifestyle.
While it's impossible to predict every obstacle on the road to retirement, Treece Financial Group is here to assist with any financial challenges that may arise.
Schedule a right-fit phone call with us to discuss how we can help you prepare for potential debt scenarios.
RELATED ARTICLES:
8-Point Retirement Plan Review: Make the Most of Meeting With Your Financial Advisor
Don't Let Divorce Derail Your Retirement: How To Protect Your Finances