The picture of retirement in all of our heads is a pretty one. Sitting on a sandy beach sipping margaritas? Reading a book on the hammock in the garden? Sound about right? Or instead, will you have to constantly wonder how to get out of debt fast, so that you can enjoy your retirement peacefully? It is up to you to plan for a debt free retirement.
How to Plan for a Debt Free Retirement
Any person living in retirement can also carry great amounts of mortgage debt, student loans, or credit card balances. How can you plan on managing your debt and living a stress-free retirement? The key to mitigating, or better yet, eliminating debt in retirement is really not rocket science!
If you are looking to plan a debt free retirement, start planning early. This applies even if you are decades away from retiring. The first step is to examine your budget. Getting used to a retirement income early on sets your expectations in the right level. Look at how you can cut back on some expenses to enhance your savings. Avoid racking up too much debt now.
Be Serious About Your Emergency Fund:
When you plan for a debt free retirement, an emergency fund must be taken into consideration very seriously. In your retirement, medical expenses are one of the biggest expense categories and your insurance plan may not be as good as the one you have now. Therefore, be prepared to handle these high expenses.
Do Not Ignore Your Debt
If you have a leftover debt to pay off in your retirement, make sure you allocate the resources to pay off your debt. Maybe your retirement is a good time to make your hobby into an additional source of income. You can also get a part-time job to help supplement your earnings. If you have a larger debt to pay off you can also contact your creditors and see if they will negotiate a lower interest rate.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.