When I perused a USA Today newspaper recently, I read a statistic* that stuck in my mind: “66% of adults 45 and older are concerned about not being able to maintain a reasonable standard of living in retirement.”
Sixty-six percent is significant! This led me to think about two expenses which have greatly impacted some of my retired clients. As you prepare for retirement, you may want to end these financial obligations before you stop receiving regular paychecks.
1. Home Mortgage
Before I met Bill, he had remarried and moved out of a continuing care retirement community. Bill was in his 80’s, and he and his wife had purchased a beautiful condominium. This condo was expensive, however, and as Bill’s health declined and he needed care, the large monthly mortgage payment became a huge financial drag. Bill had some hard choices to make. He and his wife ended up selling the condo to free up money to pay for his care.
If you are heading into retirement with a mortgage, you can work towards paying it off.
- Every month you can make an extra payment towards your principal. The Extra Mortgage Payment Calculator at www.mortgagecalculator.org can help you determine an amount for your extra payments.
- Another approach is to sell your current house and use the proceeds to purchase a smaller one with cash.
2. Credit Cards
Credit card interest is higher than most other forms of debt. When paid over several years, the interest becomes expensive. Marjorie retired with a $10,000 credit card balance. When she realized the burden of carrying this debt, she decided to pay it off as quickly as she can. It will take her three years, and she will pay $2,500 in interest. Marjorie said she wished she hadn’t charged up her card when she was working. She didn’t need the things she purchased, and now she has this debt hanging over her head. Making regular $350 payments takes a significant chunk of her monthly income, but she is determined to be debt free.
If you would like help to pay down credit card debit, you can work with a consumer debt counseling service.
- To find one, contact Financial Counseling Association of America and/or National Foundation for Credit Counseling.
For a comprehensive review of your financial situation, consider consulting a Certified Financial Planner (CFP). You can find a professional with this credential at the CFP Board website, https://www.cfp.net. Certified Financial Planners are held to strict ethical standards and have passed a rigorous examination.
If you are concerned about being able to maintain a reasonable standard of living in retirement, I urge you to review your finances, and do what you can do now to reduce your financial obligations when you are no longer working.
This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.
The names of the individuals in this article have been changed to protect their privacy.
*“USA Snapshots.” USA Today 26 Feb. 2018:B1.Print.
