Although the retirement dreams differ, no one wants to be stuck paying debts during their retirement. While everyone wishes to get out of debt just in time for their retirement, not everyone can do this due to one issue or the other. Maybe if wishes were horses this would have been possible.
Over the years, the amount of debt owed by retirees has increased tremendously as most people continue to find it hard to clear their debts before retirement. While this may sound like a lot, hope is not lost. With the right plan, you could pay your debts early into your retirement and enjoy it as much as you’ve always wanted.
Clearing your debt during your retirement could sound like a hurdle, but with the right information, you would be able to cross this hurdle easily and in no time. Here are some tips that would go a long way in helping you clear your debt during retirement.
- Stop incurring more debts
Since you’ve stopped working, the wise thing to do is to stop incurring more debts. Although retirement is supposed to be fun, you could always have fun within your means and not above. Paying debt is hard enough and incurring more debts when your income is fixed could make it worse.
Also, since your retirement income is fixed, the varying value of the dollar could weigh down on it with its interest rates. However, if you find yourself incurring more debts even in retirement, you want to ensure that you have a plan to pay this debt easily.
Also, you should ensure these debts have very low-interest rates. To pay these debts, you could opt for the debt settlement option where you pay a substantial amount of your debt and not the full amount
- Cut your costs
Cutting your costs during retirement doesn’t hurt as much. You could cut on subscriptions, car insurance, shopping and so many more. This helps you increase the monthly debts payments you make and reduce your repayment period significantly.
Also, as this is only for a short while or until your debt is paid, you can be debt-free in no time and get started on your dream retirement plans. Practically, it is sacrificing the first few years of your retirement so you can enjoy the rest of it as much as you want. If your debt is high up the charts, you could make use of a debt settlement program to help reduce your debt and consequently, your repayment period.
- Invest wisely
With the right investment, you could clear your debts easily. Investments, when done the right way, yield significant returns that go a long way in settling your debt. However, due to the rampant recent scams, you might want to tread carefully while you are doing this.
The last thing you want at this period is to lose your retirement savings to a scam. So while you are planning to invest, you should do it wisely. Also, avoid get-rich-quick schemes as they have the highest risk and are not financially advisable as a solution to your debt.
- Find an easy extra source of income
Looking for an extra source of income during your retirement is not a bad idea. With the extra income you gain, you can clear your debts in a shorter time. However, you should remember that you are not as strong as you once were. So you should ensure that any work you opt to do is easy and not stressful.
The last thing you need during this period is to have to pay hospital bills due to health-related problems from strenuous jobs. Easy jobs you can sign up for include teaching, being a consultant, working for courier services and so many more.
When you are done clearing your debt, you could resign and live the retirement dream you’ve always wished for.
- Clear your debt with retirement funds
While this is not the first option, it is still an option for you to consider. Paying off your debt with your retirement funds could be a bad or a good idea depending on your situation. If you have more than enough in your retirement funds, to cover your debt and still maintain your cost of living, then you can go ahead with this option.
Also, you could opt for a debt settlement, so your debt doesn’t weigh down on your retirement funds. However, if this cannot work for you, investing in your retirement funds would be a better option. You could use the return on your investments to pay off your debt and still have your retirement funds intact.
- Move your credit card debt to a low percent interest credit card
Credit card companies often offer an introductory rate of 0% that last for a limited amount of time. If you have a good credit score, you could move your balance to the new card and pay off your debt without interest.
However, this affects your credit score but who needs one when they are already retired. Just make sure your debt is paid before the end of the introductory period to avoid paying any interest. While this may be simple, not everyone has a good credit score, to begin with. If this applies to you, you can opt for a debt settlement through which you get to pay a substantial amount of your debt but not the full amount.
- Make use of a debt settlement program
Debt settlement programs ensure you pay a substantial amount of your debt but not the full debt, this way you can lessen the burden that comes with your debt. Also, it reduces your repayment period, and you get to be on a jolly good ride to the retirement of your dreams in no time.
Contrary to popular opinion, debt settlement is safe and has less of the risks it’s rumored to have when it is done the right way, so if you are going to consider a debt settlement, do it the right way.
- Leverage your life insurance policies
To do this, you can take a loan against your life insurance policies or you could surrender it and get a settlement value. Although it is quite expensive as fees and tax may take up a quarter of your money, the great thing is you still get some money anyway which is exactly what you need. However, this is only applicable to permanent life insurances only and not term life policies.
Debts can be frustrating at any point in your life most especially during your retirement. However, with the information contained in this article and a good debt repayment plan, you would find yourself clearing your debts easily in no time.