Many people view retirement as a time of fun and relaxation; however, those aspects of retirement can be thwarted if you are drowning in debt. There are specific types of debt that you should try to take care of before you retire so that you can enjoy the freedom of not having to punch a time clock each day.
One type of debt that you should try to squash is medical debt. This debt can add up easily. In fact, a 65-year-old person who retires in 2016 can expect to incur an average of $260,000 in medical debt over the course of their retirement. When you think about this number, it is easy to understand why you wouldn’t want to add any medical debt from prior to your retirement into that figure.
Another debt that you should try to take care of is your mortgage. The money you spend on a monthly mortgage is likely a hefty portion of your retirement income. Paying this off as quickly as possible can help you to have more free money to cover other costs of retirement. When dealing with mortgage debt, you might be able to downsize for your retirement for a smaller payment. Downsizing can also help you save money on utilities and related costs.
Credit card debt, student loans and auto loans are issues for some retirees. Trying to knock these accounts out can help you to rest a bit easier. This doesn’t mean you have to close the credit card accounts, but you should be sure not to rack up too high of a balance.
If you are nearing retirement or are already there and are spending too much time trying to figure out how to pay off all your debts, you might consider bankruptcy. Learning about how bankruptcy can affect your retirement years might help you to make a decision.
Source: AOL.com, “5 debts you need to tackle before you retire,” Cameron Huddleston, Feb. 02, 2017