After a lifetime of hard work, retirement should be an opportunity to relax, explore your interests and spend time with the people you love. But chances are that you, like about 97% of retirement-aged Americans, may also have some non-mortgage debt to pay down.
You might take out a debt consolidation loan in the years leading up to retirement to pay down higher-interest debt. But when you still have debt to pay off, how do you balance your retirement dreams with financial reality? As long as you make thoughtful financial decisions, debt doesn’t have to tarnish your golden years.
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Budget for debt payments
When you rely on retirement savings, it’s especially important to have a clear idea of your set monthly expenses: housing costs, utilities, groceries, subscriptions, regular medications and debt payments. When you know your fixed monthly expenses, you can plan better for the future, including putting aside extra money for fun purchases. For example, maybe you have a tropical beach vacation with your family at the end of the year. It’s easier to come up with a spending plan for the trip when you know how much to subtract for your debt payments.
Minimize new debts
If you swipe a credit card when you’re out for lunch or picking up groceries, be sure to pay your balance in full by the due date. When you’re living on a fixed income, even small debts can quickly add up and throw off your budget. Only borrow when absolutely necessary and plan to repay your debt as quickly as possible.
Be on the lookout for savings
If you want to stretch your savings, don’t leave any deals or freebies on the table. You may have plenty of low-cost resources available that can help your retirement funds go further.
Discounts
Don’t dismiss the value of a senior discount. Many businesses offer special rates for customers over a certain age, from restaurants and retail stores to hotels, cruises and airlines. While you might feel a little awkward at first, it’s worth asking about discounts everywhere you go. Even small savings, like a few dollars off breakfast, can add up over time.
Credit card rewards
If you have a strong credit score, you may consider looking for a rewards credit card that aligns with your priorities and spending habits. Just be sure to choose cards with no or low annual fees and always pay off the balance each month to avoid interest charges on purchases. (Cash advances typically start accumulating interest right away.) Credit card rewards may be redeemed for statement credits, gift cards or even flights. A credit card offering travel rewards can be an incredibly valuable tool if you plan to spend a lot of your retirement traveling.
Free resources
Look for community programs and free events aimed at retirees. Local libraries, community centers, and nonprofits often offer free classes, workshops, meals, movie tickets, museum passes, social gatherings and more for older adults. These resources can help you save money as you stay active and engaged in your community.
Consider living with friends
If you have the space, consider sharing housing with other retirees. Splitting some of your living costs with your closest friends can make your retirement more affordable and more fun. Even if you own your home outright and don’t have to worry about a mortgage, co-living can make utilities, phone bills and even grocery bills more manageable.
The benefits of communal living aren’t merely financial. Living with loved ones may help you fight the feelings of isolation and loneliness many people struggle with after transitioning from their careers into a new phase of life.
Plan for long-term care
If you’re living independently and in good health, thinking about long-term care can be uncomfortable. While it may be a serious adjustment, there’s nothing shameful or embarrassing about having different needs during different phases of your life. And it’s much better to have a plan for care that you never use than to be caught unprepared when you need it.
Unfortunately, assisted living facilities and home health care are often costly. If an illness or injury leaves you or your spouse in sudden need of additional support, you might seriously strain your finances. Start researching, planning, talking to loved ones and saving as early as you can to avoid rushed or unnecessarily expensive decisions later on.
The bottom line
Debt doesn’t have to stop you from creating a retirement that brings you peace, joy, and a sense of control. With the right financial strategy and thoughtful choices, you can truly live your retirement years to the fullest.
Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of entrepreneursbreak.com or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.
