A big NO to retire with debt
You can never deny the fact that you work hard today for a hassle free retirement life tomorrow. There’s always the sunshine after you crawl out of a dark den of hardship.
But what's the point in an independence with boundaries? We are talking about debts. They won't let you have a sound sleep at night if you have them around with you forever.
So should you retire with debt?I would rather say it's time to clean and get rid of those debts as fast as possible before you knock the doors of retirement.
Since you are reading this post out of sheer interest, let me guess your age. Are you somewhere between 40 to 60? Good, it's the perfect stage to clear out the money you owe.
Some might say, “Yo Jimmy, you got some good ole savings out there, invest in a new home, you can feed on the savings’ interest alone, plus you can pay off the mortgage... Or... get the new mustang, now is the time... Blah blah blah”. Well, guess what, say ‘NO’ to those straight away.
You should never take out new lines of credit after you retire; that will be the most insane decision you can make after your marriage!
Let’s get to the point right away.
What about the mortgage - The death pledge:
I don’t know about you, but I would stay miles away from this debt if I am to retire soon.
Dusting off the mortgage should be your first priority. In the present day, the percentage of Americans retiring with a mortgage debt has increased over the years, which is a big sign of risk!
Paying off a mortgage loan is a time taking process; the loan terms can be 15 years to 30 years. So, if you take out a mortgage at the age of 30, and if you go for a 30-year plan with low monthly payments, there are high chances that you will drag this loan till your retirement.
If you think there's no way you can get rid of this before you shut the doors of your working career, then I would say go for refinancing right away, so that payments are more affordable.
Refinancing, loan modification, downsizing, do whatever you want to but get this beast out of your life before retirement.
A number of people say, a low-interest rate mortgage is nice to hang around with, but I say ‘No’. The right decision would be not to let debt touch your retirement savings anyhow. You should never retire with this mortgage debt.
The Vroom Vroom can doom your life:
Cars are both attractive and an obsession at the same time. I can never tell you to cancel your dream of purchasing a Porsche car for which you are saving for more than 10 years now.
But if you have an existing car and a decent amount from your paycheck goes to satisfy your auto loan, then clear out the loan agreement before you retire.
Also if you are planning to buy an expensive car after your retirement, then try to pay the amount in cash. Else if you opt for an auto loan, I would not consider it as a wise decision as it will become a burden to cut amounts from your savings.
If you want to purchase a new car, do it before retirement. Sell the one you already have and carry forward the amount for your new one. Cars are not investments; their value depreciates with time.
Paying the student loan is not anymore your role:
Reaching retirement means cutting loose strings of financial attachments. You have made enough contributions to your child’s future.
It is now time for the children to pay back their parents. They must be self-sufficient by now.
Ask your little child, who isn't so little anymore, to partner in flushing out the student loan. Compel your child to get a job if he or she is fooling around in the college.
They can find a source of income and earn better than what you may earn at this age.
Student loans will make you scramble through your savings and social security accounts.
In your age of retirement, student loans will just increase the pressure and nothing more. So get done with the loan and focus on your retirement income for a prosperous ending journey.
Sabotage the credit cards:
Revolving credits are terrific. We all have a clear picture about that. But we are helpless as going without credit cards is almost impossible these days.
It's important in purchasing immediate and emergency goods. You get reward points and cash back on extra shopping offers.
Still, are you capable enough to repay the debt? I mean you were, but will you be able after you retire? The interest rates on credit cards are quite high, sometimes peeking 15% or more than that.
So my suggestion would be to turn into cash and get out of the credit card debt cycle, one by one.
It maybe fun now to use credit cards but once your income gets limited after retirement, it will be a big headache to repay the outstanding balance.
If you are worried about how to wipe out these amounts, then you can read the ways to consolidate your credit card debt.
Once you are done with these 4 debts, you will thank me for the suggestions.
Here are 4 additional tips for a good retirement.
- Invest in a 401(k) plan from the start of your career.
- Follow an inexpensive lifestyle, maybe a frugal one, till you repay the last cent.
- Maintain a suitable budgeting strategy, like the 50-20-30 budget plan.
- No need to incur new debts in your retirement life.