Tuesday, August 17, 2010, AM | 2 Comments
Recently a new concept has been created that it’s OK to carry debt into retirement, including home mortgage. There is a big problem with that. Your income is a lot less than when you were working full time. You must service your debt, there is no way out. If the debt is at the proportion that you cannot pay it on a monthly basis, then most retirees take the last option. They file for bankruptcy. That can be devastating in terms of your financial and psychological livelihood. In retirement you don’t have the time to recover from it.
Most retirees file for bankruptcy…
If you declare bankruptcy for any reason when you are many years away from retirement, there is a good chance that you can build, once again, a good credit score and live a good financial life. You can look forward to your retirement, if there is such a thing anymore.
When you file for bankruptcy in retirement, some doors are closed for you. Whatever pension and social security you have may not be enough to live on, otherwise you would not have declared bankruptcy in the first place.
At the beginning of the Worst Recession, people of all ages were hurt in their investments. Seniors were probably hurt the most and they had more to lose. They don’t have the time to recover their losses. Their wealth-accumulating years were behind them.
Most retirees don’t need to file for bankruptcy…
- The main reason for considering bankruptcy is to ward off creditors that threaten to seize wages or assets. However, retirees have no full-time wages to be seized.
- It is very difficult, if not impossible, for a creditor to seize a pension.
- For homeowners still paying off mortgages in retirement, selling would make sense if there is enough equity and the proceeds can be used to pay off all debts. They then can move to a renting place.
O, The young of the world! Don’t despair – Begin to repair…
Don’t throw away your retirement life in the gutter while you are still many years away from it. But when you get there, and believe me you would get there a lot sooner than you think, you should have enough cash and investment to live a comfortable life. By that time, you should have paid off your home mortgage, hopefully a lot sooner.
In a Nutshell
Don’t let your free spending cloud your retirement life. Pay off your mortgage before that time. Start working now for avoiding bankruptcy later in retirement.