By Stewart Smith
We all desire to spend our post retirement days in ease, pleasure and enjoyment. However, to do this you need to retire with enough money to cover your daily retirement expenses and any emergencies that arise. You also should not have any more debt left to take care of in the post retirement days.
Sadly, ignoring this one piece of advice and retiring with a large amount of debt can derail even the best-laid retirement plans.
Yes… debt relief is essential before retirement to assure a secure financial future.
Why debt is a killer of retirement dreams
Remember, very few retirees walk away from their job and earn the same amount of money in the post retirement days. The only source of income retirees can rely on is a meager pension plan or withdrawals from a nest egg. And outstanding debt can eat up a large portion of your cash flow each month. Eventually, when you meet an unexpected financial need or a sudden cost increase, your funds fall short of covering your needs.
Delay retirement until your debt is fully retired
If you are thinking of retirement and your finances are messed up by huge consumer debts, you really should delay retirement until your debt is paid off. It is worth working a few more years before retiring to gain financial security. Once you set the goal of a debt free retirement, if you devote a major portion of your earnings to paying off your debts rather than acquiring new toys, so you can attain a debt free life before losing that regular income. Being free of consumer debt can help you to boost your cash flow and prevent you from withdrawing too much money from your nest egg after retirement. Working a few more years can also ensure a secure life ahead as you can potentially earn a larger pension or larger social security payments because you pay more into the system and contribute more to your employer-sponsored retirement plan, such as a 401(k) or Thrift Savings Plan, or IRA.
Post retirement debt removals
If you have already retired with unpaid debt, you have a few options to consider. Assess your current financial situation, take into account your monthly obligations and cash flow. Consider getting help from a professional debt consultant or financially savvy friend. One of the best ways to eliminate debts is to pay less interest and/or generate more income.
To reduce the amount of interest you pay, you might consider refinancing your mortgage but this may be difficult without a regular income. You may consider replacing your multiple debts with a debt consolidation loan or transferring your credit card balance to a 0% interest rate credit card. By refinancing, you might be able to lower your monthly payments, but will probably end up prolonging the repayment time.
Perhaps the best way of repaying your debt is by earning more money. A part-time job or consulting gig or a fruitful investment plan can boost your income and help you to repay your debts more quickly. This will also help you to maintain your skills and keep you energized… but if you are collecting Social Security there are limits to how much you can earn.
So the key is to eliminate debt before retirement to secure a happy debt free life after retirement.
Stewart Smith is a financial analyst and writer. He has written articles on bankruptcy, investment opportunities, debt relief programs and more.
Resources:
Reduce your interest payments with Balance Transfer Credit Cards or Low Interest Rate Credit Cards