What should you do if you are retired and in debt? The truth is that debt is one of the common threats to traditional retirement. But just because you currently have debt obligations doesn’t mean that you need to delay your retirement plans. While the ideal scenario is to pay the debt in full before reaching retirement, rest assured knowing that there are solutions to help retirees pay off debt.
Retired? How to Pay Off Debt
People who are retired and in debt can use a few strategies to pay these balances off as quickly as possible. Remember that it is worth a little sacrifice right now so you can enjoy as much of your retirement living debt-free. Here are a few ideas to help you get started with your debt repayment plan:
- Get a Side Job: Even though you are no longer working full-time, a part-time job can bring in the extra cash you need to pay off the debt balances. A few hours a week can help so you aren’t retired and in debt for too long.
- Postpone Retirement: Is it realistic for you to step back into the workforce again? Working a full-time job for a year might be enough to wipe out your debt.
- Set a Budget: When you are on a fixed retirement income, you need to have a clear picture of how much you are spending each month. If you are retired and in debt, then aim to set a budget lower than your income so there is money left over to put toward debt payments.
A few small changes can go a long way to free up the cash you need for keeping up with the debt payments.
Retirement Debt Plan
Also, remember that certain types of debt can create opportunities in retirement. If you have business debt, then make sure that the money is bringing a positive cash flow throughout the year. Or, if you have a home mortgage, then evaluate your options to refinance or pay it off as quickly as possible.
Being retired and in debt isn’t necessarily a bad thing – you just need to have a financial strategy in place so you are prepared for the future. Consider working with a debt expert or financial advisor to find the right solutions for your unique needs.
Taking Control of Retirement Debt
The principles for managing debt in retirement are the same financial strategies used before retirement. Be proactive in minimizing interest rates whenever possible. Also, be careful to avoid unnecessary spending that will add to your debt burden.
Debt repayment is possible at any stage in life. If you are retired and in debt, then now is the time to pay off the balances so you can regain financial freedom and peace.