Retirement often brings concerns about debt, with more than a quarter of retirees still carrying mortgage and credit card debt, according to recent findings from the Nationwide Retirement Institute. The challenge is further intensified by inflation, leaving many retirees feeling the financial pinch.
Alarmingly, nearly a third of retirees believe they will be less financially secure than their parents and grandparents during retirement. Additionally, one in five worries about their ability to meet monthly bill payments. These financial pressures can lead to hasty decisions, such as withdrawing funds from retirement accounts too quickly.
To navigate these challenges, retirees can adopt several strategies to manage debt while protecting their savings. One practical approach is to curb discretionary spending, such as entertainment and travel, which many retirees are already doing. Another consideration is delaying retirement by a year or two, allowing more time to create a plan for paying off debt and continuing to contribute to retirement savings.
For those aged 59½ and older, accessing retirement accounts without penalties can be an option to pay off high-interest credit card debt. However, it's crucial to weigh the long-term consequences of reducing retirement savings. Retirees should also compile a detailed list of their debts, prioritize those with the highest interest rates, and explore negotiating lower rates with credit card companies.
Retirees might also consider using balance transfer cards or seeking assistance from credit counseling agencies. In extreme cases, bankruptcy could offer a way out, though it's essential to understand the effects this could have on retirement accounts fully.
By taking proactive steps to manage debt in retirement, individuals can enhance their financial security and work towards a more stable future. It's always possible to address debt concerns and make strides toward a more secure retirement.
