3 Debts to Address Before You Retire


3 Debts to Address Before You Retire

Posted by Infinite Wealth Advisors, LLC
7 years ago | February 13, 2017

Discussing papersWhat’s your retirement dream? For some, world travel is the goal. For others, hobbies and activities are a high priority. But we can probably all agree on one thing: Retiring without debt would feel great! Imagine how much fun you could have, if you aren’t burdened by bills.

Unfortunately, about 80 percent of Baby Boomers are carrying some form of debt. It might not be possible to retire completely debt free, but you should consider at least paying off the following types of debt before you retire.

Credit cards. Credit cards can wreck your budget, because a high interest rate means you could be paying on them for years without much progress. Start by paying down the largest balance, or card with the highest interest rate first. In some cases, you might be able to transfer the balances to a zero-interest card, which allows you a period of time to make real progress. Toward the end of the card’s zero-interest period, see if you can transfer the balance once again. This only works, though, if the card does not charge a high transfer fee or annual fee.

Taking a low-interest credit consolidation loan is another way to attack debt. No matter which method you choose, remember to get rid of those cards so that you don’t run up another big balance.

Student loan debt. Once you’ve finally paid off your own student loans, and begin to prepare for retirement, your children go off to college and need money. It’s understandable that you want to help them prepare for a comfortable life, but it’s generally unwise to take on student loan debt in your name. Look for other ways to finance a college education, but if you must take out some loans, be sure you can pay them off before retirement.

Mortgage debt. Mortgage debt isn’t always a terrible thing. However, you should definitely evaluate whether your retirement income will allow you to comfortably cover the payment. If you have a high-interest loan, refinancing could help you lower the payments. Another option is to work a few more years and pay off the debt before retiring. Or, some people sell the home and downsize into something more affordable. You might actually enjoy a smaller home that requires less maintenance and yard work.

As always, contact us with your retirement planning questions. We can help you identify your goals, set a target date for retirement, and make the decisions that can help you live out your retirement dreams.

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