Many people envision entering retirement with a hefty nest egg, no debt and nothing but free time. While it works out that way for some, it’s not the reality for others. Lingering debt often follows people into retirement and reduced income leads to folks reaching for credit cards to make ends meet, which adds additional debt. Let’s look at ways to pay down debt during retirement.
Stop Accruing Debt
It may seem obvious, but in order to pay down debt, you need to stop using credit cards. You’ll never get out of the debt hole if you keep borrowing money.
Put Off Taking Social Security
Americans are eligible to begin receiving Social Security benefits at age 62. But if you delay tapping into benefits until after your full retirement age, your monthly allotment increases, which will be helpful in paying down any lingering debt.
Add an Income Stream
Retiring from your primary career doesn’t mean you need to stop working altogether. If you’re trying to pay down debt, a part-time job can help you do that. Plus, you may have an opportunity to receive additional employment benefits.
Avoid Financial Risks
If you feel you haven’t saved enough for retirement, you may be tempted to take big swings to make up for lost time. It’s not uncommon for those in early retirement to try things like day trading or even gambling to try to quickly fill their coffers, but it almost never ends well. Avoid anything that promises quick returns and easy money — it’s most likely a scam.
Lower Your Cost of Living
Selling your home, cutting back to a single vehicle or even moving to an area with a lower cost of living are all ways to make retirement more affordable and free up money to pay down debt. Look for ways to simplify your life and cut unnecessary expenses. You’ll be surprised how much easier life can be when you get back to basics.
Ask for Help
One of the most efficient ways to pay off credit card debt is a debt management plan. These plans are offered by nonprofit agencies who work directly with creditors to secure lower interest rates for their clients. In addition to lower interest rates, clients on a debt management plan enjoy the convenience of consolidating multiple payments into a single monthly payment, and they no longer need to pay any late or over-limit fees.
A free credit counseling session is the first step in finding out if you’re eligible for a debt management plan.
