Ready for Retirement? 5 Ways to Eliminate Debt in Preparation

Tuesday, January 31, 2017, 6:00 AM | Leave Comment

If you are like many Americans, you may have a significant amount of debt that will be a burden when you decide to retire.

Here are some tips on eliminating your debt so that you can enjoy your retirement years debt-free.

Ready for Retirement - 5 Ways to Eliminate Debt in Preparation

  1. Prioritize Your Debts

    Finance experts recommend prioritizing your debt to pay off high-interest loans first. This action will help you to pay off more expensive debt faster, making lower interest rate loans much easier to discharge.

    Contact a financial company like Family Financial Partners if you have questions.

  2. Work to Lower Interest Rates

    Lowering interest rates can be a great way to eliminate monthly payments on credit cards, mortgages and other loans more quickly.

    Talk to your lending institution to determine if they would be willing to provide a lower interest rate.

    For credit cards, it may be advantageous to transfer balances to lower rate cards, even when a fee is involved.

  3. Look for Ways to Trim Household Expenses

    You may be able to adjust your household expenses to free up more money for paying off old debts.

    Look carefully at your cable bill or satellite TV. A change to a different system may offer significant monthly savings, or you may be able to take advantage of introductory offers.

    Many people choose to “cut the cord” on their cable systems, opting for Roku or other systems that provide less expensive programming.

    Lower your thermostat to save money on energy bills. Energy is one of the largest expenses in the household budget. Wearing a sweater or turning down the air conditioning can help you to save money that can go to reducing your debt to prepare for retirement.

    Hold off on major purchases. Instead of getting the new car or new electronics, stretch out the use of the old one. This measure can keep you from adding more debt while you pay off the old one.

  4. Consider Downsizing Your Housing

    You may have a significant amount of equity in your home that could be used to pay off debt. It may be that you no longer need the large home in which you raised your children, and the upkeep of larger properties is higher in terms of labor and expense.

    If possible, find a smaller residence that will completely eliminate a monthly mortgage payment, which will grant you greater freedom in your spending.

  5. Work A Little Longer

    It may be possible for you to put off your retirement for a year or two, allowing you to have more money to pay off debts before you retire.

    This adjustment can be a workable plan for those who are in good health and have jobs that are not too physically taxing for someone who is older.

The financial moves you make before retirement can have a significant effect on how comfortable you will be in your post-working period. These tips can help put you on a more secure financial footing for your retirement years.

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