Managing Debt for Retirement

General Guidelines

• In the 10 years before retirement, reduce your debt.
  • Pay off credit cards, car loans, student loans and any other debts you pay monthly (known as consumer debt).
  • If possible, pay off your mortgage.
• Don’t take on new debt prior to or during retirement without having a plan to repay it.
• Track your spending and pay your bills on time. Talk to creditors early and often if you think you may fall behind.
• Keep at least three months of emergency funds in cash to avoid using credit for unplanned events.

Having debt is a normal way of life for many Americans. But unfortunately, many older Americans are starting to carry greater amounts of debt in retirement than previous generations. To achieve the retirement lifestyle you will want, you need to begin reviewing your current debt practices. Identifying some debt habits and making changes to either eliminate or reduce your debt will ensure your retirement savings last as long as possible.

Reliable Resources

• AARP provides numerous articles about debt management.
• The Consumer Financial Protection Bureau is a government agency offering free information to consumers on credit matter.
• The Federal Trade Commission site provides information about money and credit issues.
• My Retirement Paycheck is a NEFE site dedicated to retirement issues.
• SAM’s Money Basics Credit and Debt course covers strategies to reduce and manage your debt load.