Why Debt and Retirement are Not Compatible
Retiring with any form of debt is considered to be extremely risky because it not only adds a level of stress that you definitely don’t need during this time of your life; it will reduce the amount of money you’ll have to live on each month as well – and Social Security will almost certainly not be enough to bridge the shortfall in your finances.
Below are just some of the reasons why you should do everything possible to enter retirement debt-free.
Interest Payments could be Used to Fund Living Expenses
The last thing you need to deal with during your golden years is having to throw money away in the form of interest payments and finance charges – which is what you’d be doing if you’re still carrying consumer debt by the time you stop working.
It’s strongly recommended to pay all consumer debts – and preferably mortgages as well – in full by the time you reach your late 40s or early 50s at the latest. This will give you enough time to start putting additional funds away that will come in handy once you’ve stopped working.
Your Income could be Severely Limited
Many seniors are disappointed to find that they will have to live on a fraction of the funds they were used to enjoying while they were employed – which will only be more difficult to do if you’re still trying to pay off debt when you retire.
Eliminating consumer, mortgage and student loan debt before retirement will help provide you with just that little bit extra to get by with each month – which will be crucial if you haven’t been able to save a lot of money for this period of your life.
This is Not the Time of your Life to Stress over Finances
Your golden years are not the time to be stressing over how you’ll make the mortgage payment or repay that car loan you took out while you were still working. Retiring debt-free will not only provide you with an increased sense of financial security; dealing with less financial stress will allow you to focus your time and efforts on the more pleasurable activities such as traveling, engaging in a new hobby or even enjoying a few extra meals out every so often.
Get your Budget and Investments Sorted before Retirement
Before you can even think about retiring, it’s essential that you’ve inspected your budget and investment or savings portfolio to ensure that you’ll have enough money to live on once you’re no longer employed. Setting up an appointment with an accredited financial advisor will help you determine where you are on your financial journey and whether any adjustments will need to be made with regards to your savings and investment plans.
If you would like to obtain additional information about ensuring that your retirement years will be as financially stress-free as possible, contact our advisors to schedule an appointment with one of them today. We look forward to helping you plan the best retirement possible.