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Reduce Your Debt Before You Retire


Unlike their parents, many Baby Boomers are going into retirement carrying a large amount of debt, often as a consequence of attempting to maintain an unrealistically high standard of living. Although it’s a common attitude, it’s not a wise one. It’ much better for you — as much as possible — to reduce your debt before you retire.

Reduce Your Debt Before You Retire

Retiring with minimal or no debt is one of the most effective ways to make your retirement savings go further. Minimizing or eliminating debt repayment in retirement reduces interest costs and immediately increases cash flow. Likewise, downsizing to a smaller home or apartment is a great way to reduce mortgage costs and utility bills.

Use the years leading up to retirement to your advantage. There’s a growing trend of retiring baby boomers staying in debt in order to maintain their current lifestyles. However, paying off debt and boosting contributions to savings will help you to continue enjoying your current lifestyle better than paying a creditor each month for the privilege. While emergencies do happen, careful planning and saving is still the best way to stay out retirement debt-trap.

It’s far more prudent to cut back now to a lifestyle that will be sustainable in retirement than to find yourself in a position where you’re paying a creditor every month for the privilege of living comfortably.

Click here to read more about the importance of starting now to reduce your debt before you retire.

 

Posted in Creating a Personalized Retirement Plan, Planning for Your Retirement, Retirement Plan ChallengesComments (0)


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