When you think about retirement and imagine all the things you want to do at that point in your life, paying down debt never comes to mind. Unfortunately, the same doesn’t apply to the many Americans in the United States. When you start to think about all the debts you still have pending waiting for you to clear, a migraine can hit you. What with the student loan, credit card debt, supporting elderly parents, mortgages or a loan from Northcash, all waiting for you.
A study by the Fidelity Investments found that close to half of all baby boomers that have pensions always retire with debt. A demos study done in 2012 also found that the elderly, 65 and above, were the ones who had more credit card debts than any other age group. Below is a list of how you can pay down your debt in retirement.
- Consult a professional
A qualified financial planner can always guide and help you build a good retirement plan and specific guidelines that will help you move out of most debts, if not all, and also build savings.
- Know your benefits
BenefitCheckup.com, a website run by The National Council on Aging, has made it their business to ensure that you get all the benefits that you are entitled to after retirement. These benefits are mainly put in place to help pay for your healthcare, medications, utilities, food, etc.
You can always opt to downsize by selling your large home and moving to a smaller less expensive house. This will allow you to acquire some money from the home sale, which will free up some money for your living expenses.
- Accelerate your mortgage payments
You can decide to go for this option if you have a mortgage loan and cash in your bank account. You can always opt to pay off large sums to your mortgage debt is you have the cash to reduce the load of the debt.
- Refinance your mortgage
If you have enough equity to refinance your home, then it can’t be a bad idea to try it out and live off of the investments you get from it. You also need to be aware of the short-term low-interest rate deals; these rates can always spike up any time.
- Get a reverse mortgage
There are, however, risks involved with reverse mortgages like high fees and interest rates plus the accumulated interest rates that you have to pay when repaying the loan. These mortgages are among the biggest scams that are especially targeted at the elderly.
- Postpone retirement
You will have more time to earn more income to pay off your loans when you postpone your retirement. You can also delay claiming your social security benefits when you decide to work past your retirement period.
- File bankruptcy
Filing for bankruptcy, especially at the retirement period means that your bankruptcy liquidation will not affect your social security benefits, your 401 (k) accounts, or your home equity. It is best that you consult a bankruptcy attorney about the whole process.
- Ask for help
The best thing you can do in this case is to try and avoid any of the debt negotiation firms that are either scams or charge high fees.