How do I Avoid Taking Debt into Retirement?

Paying back debt is more difficult in retirement.

Do you currently have debt?

If yes, you are not alone.

About 33 percent of Americans age 50 and better carry debt.

According to a recent KSDK Five on Your Side article titled “Older Americans are getting crushed by debt,” the average amount of debt carried by these folks is about $12,500 in total excluding mortgage debt with about $4,800 in credit card debt.

If you are not yet retired, make it a priority to pay off debt.

Why?

Having debt will make it more difficult to pay for medical costs not covered by Medicare.

Sounds pretty terrible.

What can you do to get out of debt before retirement?

Wait to retire.

Receiving a consistent paycheck for a few more years and being able to postpone Social Security can help you have more money in retirement.

Let your kids be responsible for themselves.

If your children dig themselves into a financial hole, let them dig themselves out.

They have more time to pay off debt than you.

Pay your debt first.

Get rid of credit card debt before you put money into your retirement account, go on vacation, or purchase luxury items.

Downsize.

Without kids, you probably do not need as large of a living space.

Move somewhere smaller to free up money in the future.

Be proactive.

You can set yourself up for a much more stable retirement be getting out of debt.

Think of it as a "hole" in your retirement bucket.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: KSDK (St. Louis) Five on Your Side (August 23, 2017) “Older Americans are getting crushed by debt”