Right now you are in your peak earning years, and your least expense years as the kids have left you an empty nester, and you only have expenses for you and your spouse.
No more teenage binge eating to finance!
Now is the time to get your financial house in order to prepare for the frightening day when you no longer draw a paycheck.
As debt collectors in Tampa Florida, we all too often have to work with retirees swimming in a sea of debt when they should instead be enjoying a well deserved long term break on the beach. We've noticed a few key mistakes that people tend to make as they enter the empty nester phase of life, but before they retire, that leads to having to deal with our business.
We therefore present, the 5 ways to get Debt Free for Retirement.
1. Cosigning for an adult child.
The temptation is great, and we all want to help our kids get established. The truth is though, that young adult children are the least likely to pay their debts. They simply aren't yet in the habbit of payment discipline. This is their time to learn to manage THEIR OWN debt. Maybe a less expensive car that their credit can support is better for THEM in the long run, than extending your credit to a fancier car.2. Borrowing for yourself.
You feel you've earned it. You got the kids standing on your own, you've sacrificed away a professional lifetime, and AMX will fund that trip to Europe you have always dreamed of. Don't Do It! you have spent a lifetime getting here. Going on a debt spree now that your expenses are lower is like stopping 2 blocks short of the end of a marathon. In the long run, those debts will have to be paid out of fixed income investments, or worse, Social Security. Don't give up the discipline.3. Student Debt.
This falls in the sam bucket as Cosiging for an adult child. Your adult child's student loan debt will stay with them for 20 years, maybe more. Who knows with any certainty what their economic future will look like. If you must help, then offer to help with the payments, don't sign up for the debt. Help your kids to stand on their own, and take responsibility for themselves, its a good life lesson, and will protect your nestegg.4. Fiddle with Real Estate Debt.
In the past, all of your interest on your mortgage was used in your Schedule A tax filings, and had the effect of the Tax Man rebating to you a good chunk of your mortgage deduction as a whopping tax deduction. It is easy to refinance your realestate mortgage, forgetting that in the future, you will not have the dependents, and your income will be lower, and the new economic paradigm may not be as amenable to deductions for realestate debt as they used to be. Check with a tax advisors before jumping into more real estate debt.5. Credit Card and Car Loans and Unsecured Consumer Debt.
Credit card balances for retirees have trippled from 1989 to today. The average person aged 65 to 74 carries over $6,000 in credit card debt. Now is not the time to rely on expensive debt, now is the time to find ways to scale back and live within your means. It won't be long, and your income will be limited to retirement investment. Debt does not care, and interest rates tend to rise.It is our sincerest hope that we don't have to come calling on you in those glorious years of retirement. Take intelligent steps now to secure a prosperous, happy, and debt free retirement.
Till Next time.
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