If you find yourself still struggling with loans and credit card payments now that you’re approaching retirement, you’re not alone. With an average debt of nearly $40,000 in older households, America is still adapting to changes in life expectancy and the effect that this is having on working lives. This also means that retirement isn’t the end of life that it used to signify just a few decades ago. It’s not too late to make preparations for your retirement. Many people live long and happy lives after they stop work and it can still be a fruitful time for you if you manage your money well.
Take stock of your money
Start by assessing your finances and making the best of what you have. If you have been in real financial difficulty in the past, you might want to set aside a separate account that isn’t subject to Chexsystem. This will keep safe money that you will always be able to access for emergencies or basic living expenses, even if all your other assets are frozen. Once you have secured a safe account, make a plan for the future that avoids any further problems that could affect your credit score.
Minimize your debts
If you own a house, consider increasing mortgage payments before you retire. If that’s not possible, think about downsizing now before you stop working. At the very least, this could save you money each month and it could mean paying off your mortgage entirely, freeing up more cash for your retirement. Look at other assets too and cut back on any that you can’t afford to keep. Unless for business use, there is no tax relief on a car payment plan, so swapping to a more affordable option that you can purchase with cash makes sense. If you must take out a loan, make sure it’s timed to end when you want to retire. Pay off credit cards with the highest interest rate first or consolidate to a card with a lower interest rate to make one easy payment every month.
Lower your expectations
You may have had great plans for your retirement and, no doubt, being in debt was not one of them. Try not to dwell on the past but learn from financial mistakes. Struggling to pay bills is the reason most Americans give for not saving more and this means that over 40% of Americans have less than $10,000 saved for when they retire. Be strict with your budget now, work as much as you can while you are able and secure what savings you do have for emergencies. Although there is insecurity about the future of social benefits, for now, they do provide a steady income. You can claim from the age of 62 but the longer you delay before taking any money the more money you will receive each month.
Taking steps to simplify and stabilize your finances, no matter what stage you are at in your life, can bring significant rewards. If you are lucky enough to live a prolonged and healthy retirement, as long as you are sensible with your money, you should still be able to relax and enjoy it without financial worry.