Don’t Let Liability Spoil Your Retirement

Twenty years ago, debt was often associated with retirement. Once you are becoming old and nearly approaching the time that you will have to rely only on fixed pensions or income from your investments to support yourself, you become intent in paying off your liabilities and celebrating that all of them are behind you.

However, according to the latest Census data, today there are more elder people ranging from 65 and above are suffering from debt.This is alarming since it is not only limited to the middle class citizens. Seventy five percent of the rich who earn more than $100,000 have mortgage liabilities.

You do not have to be spotless of debt once you are retired, all you have to do is to make sure can manage your mortgages and loans so that it does not haunt you for the rest of your life. Here are some tips in order for you to be safe from debt even after you are retired.

First, remember that you will have lesser money to spend once you have to leave your office. You have to estimate how much you will be getting from your pension. Then make a budget plan, cut off excessive costs on loans that you will no longer need after you are retired.

You can sum up all your loans and monthly bills then divide the cost to your current wage, so that it can keep you going on for years. While you still have your job you should make sure you avoid spending 25% of it on long term debts.

Second, figure out which liabilities are “bad” debts. Pay off your current credit cards and ask your company to switch into lower interest card once you are approaching your retirement days. You should be able to save for your future. Once you have paid off all your credit cards do the same for other debts that have no more value for you in retirement and have high interest rates like your old car loan.

Finally, ask yourself if your good debts are really beneficial for you. You should try and equalize your financial standing. Make sure you keep on paying your loans so that you will be able to keep its perks and benefits. Furthermore, you can also help balance out your credit by selling some of your belongings that have value. The amount you lose for the payment of your liabilities should be worth more than the amount of lost from assets you sell.

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