Retirement is one of life’s greatest anticipated milestones. After decades of hard work, you’re finally given the opportunity to sit back, relax, and spend your time as you please.
But if you’re among the 60% of adults aged 65 or older who find themselves with outstanding debt, the idea of entering retirement can evoke more stress than excitement.
Fortunately, there are several actions you can take today to help pay off debt and secure your financial future. We’ve compiled our best tips to help you pave a clear path towards a successful retirement with greater confidence and peace of mind.
Focus on Your High-Interest Debts
While there are multiple types of debt one can accrue—mortgages, auto loans, medical bills, etc.—credit card debt is often one of the most difficult debts to manage due to exceptionally high interest rates. In fact, more than 34% of senior households have some form of credit card debt.
Unless you’re able to pay your credit card balances in full every month, those high interest charges continue to accrue, causing your overall balance to rise and making it harder to pay off. So how can you break this frustrating cycle and get ahead?
Start by focusing your efforts on paying off whichever balance has the highest interest rate first. To do this, try making more than the minimum payment every month—and avoid adding any new charges. Once you’ve been able to pay that first balance in full, move on to the account with the next highest interest rate, and so on.
Taking this mindful approach will allow you to feel more in control of your finances and develop a realistic and achievable timeline for tackling your credit card debt.
Increase Your Monthly Income
The closer you get to retirement, the more essential it is to have your nest egg in place. And while your exact savings goals will depend on your unique needs and financial situation, it’s often suggested that to retire comfortably, you’ll need roughly 75% of your pre-retirement income.
Finding ways to generate extra cash that you can then use to contribute towards your debts can be incredibly impactful in building up your future nest egg. Whether it’s working overtime at your current job, finding a part-time job, or even negotiating a salary raise, increasing your monthly income can help provide you with the financial resources needed to expedite your debt repayment and secure your financial future.
Consolidate Your Debt
If your retirement plans are still a few years away, but you still have a moderate amount of unsecured debt and find your monthly payments difficult to keep up with, then using a personal loan to consolidate your debt may be the solution you need.
Through a debt consolidation loan, you essentially take the funds you receive from your loan and use them to pay off all of your other outstanding debts. In return, you’re now responsible for just that one monthly loan repayment instead of several payments to multiple lenders.
This method is effective because it streamlines the payment process. By eliminating multiple deadlines every month, you’re able to regain focus and get a better handle on your finances. Plus, given that personal loans tend to have much lower interest rates, many find that their new monthly loan repayment is more manageable than what they were previously paying towards their debts.
Seek Professional Support
Whether your retirement is right around the corner or still a few years away, taking the steps today to remove debt from your financial picture will allow you to make the most of this well-deserved time and enjoy the days ahead. If you are carrying $15,000 or more in unsecured debt, then a debt relief program like ACCS could be your best solution. Debt relief programs work to significantly reduce debt owed and give you one monthly payment that fits within your budget, allowing you to save for retirement faster.
At ACCS, we are always here to help guide and support you in planning for a debt-free retirement. Contact us today for a Custom Debt Relief Plan at no cost or obligation.