This week, I’m talking about being debt free in retirement - why this is so important and how to take steps now to become debt free by retirement. 

Today, I’m talking about why debt in retirement is problematic. If you still have debt when you enter retirement, it can create a potentially dangerous collision. This collision may not happen for many years down the road, but you can see the cars piling up in front of you and we gotta put the brakes on now. Especially if you’re still working and can take steps to pay off debt before retirement or at the very least in the early years of retirement.

The problem with debt in retirement and why it can lead to more problems down the road, is that debt creates minimum monthly obligations - bills you’ve got to pay. If you have a mortgage payment, and a car loan, and some credit card debt, those are all bills that need to be paid every month. And if they’re not paid, you’ll face serious consequences, like foreclosure or bankruptcy.

If you can’t pay your debts during your working years, it’s much easier to dig yourself out of that hole because you can get a second job or really cut back on your other expenses. 

When you’re retired though, most people have already cut out everything they could and many times you can’t go back to work to pay down your debts. 

If you’re retired, your income is limited to what your social security, pension, investment portfolio, and other income sources can provide. So your ability to earn your way out of a debt problem by getting a job is now very limited. Especially as you age. How many 80 year olds do see driving an Uber?

So by reducing or eliminating your debt by the time you hit retirement, you have a lot more breathing room and a lot more freedom and flexibility to decide how to spend your income every month, rather than being tied down to monthly obligations and payments that could snuff out any potential for fun or travel or anything else that you’d rather spend your time and money on when you’re retired. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

----------

>>> Subscribe on iTunes: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Check out our blog: https://truenorthretirementadvisors.com/blog/

----------

Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast