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How Today’s Debt Affects Tomorrow’s Retirement

Whether you realize it or not, the debt you have today could affect your ability to comfortably retire in the future. The newest generation aging toward retirement is learning the hard way just how much debt can affect you later in life. While most people consider retirement as a time to enjoy the golden years left in their lives, a surprising number are left with no choice but to work well into their 60’s. Not including secured debt like mortgages, studies are showing that those in their 50’s and 60’s owe four times as much debt as those at the same age ten years ago. Even though they may not have a significant amount of debt, retirement is difficult to reach due to their lower and fixed income. Those who can’t work in their old age have to find ways to survive on as little as $40 a month after making credit card payments and paying for medical bills. One of the main culprits at play here is the heavy reliance on credit cards that most people are accustomed to. They continue to put off paying down the debt and retirement sneaks up on them sooner than expected. With the high credit card interest rates, their payments simply don’t put a big enough dent in the debt. Bad mortgages also play a part as many simply cannot afford to pay for them on the fixed income of retirement. So what can you do to avoid this and ensure a work-free retirement?

Avoid Debt in Your Retirement

  • Avoid putting any debt on credit cards when you’re nearing retirement. At that point you should be saving your money for retirement, not adding to your debt with high interest credit cards.
  • Try paying off your mortgage before you retire. One of the difficult problems some people are facing is making mortgage payments well into retirement. Get it paid off now and you’ll be able to use that retirement money for other things.
  • Don’t use high interest payday loans. Many people get themselves stuck in debt after going through the payday loan cycle.
  • Build up an emergency fund before retirement. Many debt issues that retirees have involve having to pay off a large medical or home repair bill. With an emergency fund you can avoid using credit cards for these emergency expenses.
  • Invest your money early. You really have to consider retirement long before its coming if you want to live comfortably when it finally is time. Talk to a financial planner and make smart investments well before retirement age.

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