Paying off debt is always a smart financial move—but eliminating it before retirement is one of the best decisions you can make. With more people than ever retiring with debt, financial security in retirement is at risk. Let’s explore why carrying debt into retirement can be problematic and what you can do to avoid it.

The latest statistics reveal a concerning trend. According to the Federal Reserve's 2022 Survey of Consumer Finances, 65% of individuals aged 65 to 74 carry debt—a significant increase from 50% when the Fed began tracking this data 35 years ago.

Debt in retirement severely limits lifestyle choices and, for many, leads to an unwelcome necessity: returning to work. A study by T. Rowe Price found that 20% of retirees have gone back to work full-time or part-time, and another 7% are actively looking for jobs. The primary reason? They need more income.

Inflation has only worsened the situation. Prices today are around 15% higher than they were three years ago, catching many retirees off guard and stretching already tight budgets—especially those burdened with debt.

As Proverbs 22:7 warns, “The rich rule over the poor, and the borrower is the slave of the lender.” To avoid financial hardship in retirement, it’s critical to develop a strategy now to eliminate debt.

How to Eliminate Debt Before Retirement

If you’re 5, 10, or even 15 years away from retirement, now is the time to set a goal of becoming debt-free. A debt-free retirement provides the financial margin necessary to weather economic downturns, stock market fluctuations, and rising costs of living. Here are practical steps to achieve that goal:

1. Reduce Your Expenses

A budget overhaul can reveal unnecessary expenses you’re paying out of habit. Cut subscriptions, eat out less, and find ways to live within your means.

2. Increase Your Income

Consider taking on a side job, selling unused assets, or even delaying retirement by a few years to maximize savings and accelerate debt repayment.

3. Downsize Your Home

One of the most impactful moves is downsizing. If you still have a mortgage, selling your current home and purchasing a smaller one with cash (or a significantly reduced mortgage) can dramatically lower your monthly expenses. Additionally, a smaller home means lower property taxes, utility bills, and maintenance costs.

4. Pay Down Your Mortgage Faster

If downsizing isn’t an option, commit to making extra mortgage payments. Even one additional payment per year can shave off several years from your loan and save thousands in interest.

Addressing Consumer Debt

Credit card debt is another major obstacle in retirement. High-interest rates, which often increase with inflation, make carrying a balance extremely costly. Here’s how to tackle it:

• Use the Snowball Method: Pay off the smallest balance first, then roll that payment into the next debt. This approach provides quick wins and motivation to continue.
   
• Avoid Using Home Equity: Converting unsecured credit card debt into a home equity loan puts your house at risk if you can’t make payments.
   
• Seek Help If Needed: If you have more than $4,000 in credit card debt, consider working with Christian Credit Counselors. They offer debt management plans that can help you become debt-free 80% faster.

One thing we’ve never heard at FaithFi? A person calling in to say they regretted paying off their debt. Eliminating debt before retirement ensures financial security and provides more time and resources to serve God’s Kingdom.

So, make a plan today. Your future self—and your financial journey—will thank you.

On Today’s Program, Rob Answers Listener Questions:

• Do I still have to keep filing married filing joint even though my husband left me about three and a half years ago and we do not live together?
• I inherited a traditional IRA from my mother when she passed away in 2017, and I'm not sure whether I need to disperse it in 10 years or if I can continue taking required minimum distributions (RMDs) over my lifetime.
• I don't have a 401(k), but I own a property that I could sell for $250,000 to $350,000. I'm not sure what to do with the money from the sale to help me prepare for retirement, since I'm still working full-time at 61 and don't plan to retire soon.

Resources Mentioned:

• Faithful Steward: FaithFi’s New Quarterly Magazine
• Christian Credit Counselors
• Wisdom Over Wealth: 12 Lessons from Ecclesiastes on Money (Pre-Order)
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards of God’s resources.

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