Reducing Debt Before You Retire
The less debt you have at retirement, the more money you will have to live on and it may allow you to retire sooner. If you have huge debt at retirement, you may have to keep working to live and pay off the debt. We’ve been working on this since our last child left home.
In 3 months my husband will be able to enjoy some of the fruits of all his hard work, investment decisions and penny pinching. Besides putting money away in an IRA and a 401K, we’ve been doing other things to prepare ourselves mentally and our pocketbooks financially for retirement.
Needless to say we still have debt, though we have reduced it by quite a bit. Our mortgage debt is around 5 figures and the college loans at 4. Our credit cards are paid off, except for one which is paid off every month. It’s taken us awhile to get to this point, but we put every extra penny towards paying off credit cards and other small loans first. We still have the house loan and the college loan to give us some write-offs at tax time.
We both work fulltime and are not extravagant spenders, buying every new toy that comes on the market. We’ve been buying used cars and traveling at non-peak times to get good fares. As money builds in our checking account, we either put it towards the IRA or purchase gold and silver coins. We’ve found that to cut back on unnecessary purchases now and put that money against the debt is easier to do when you’re bringing in income from a job rather than when you’re on social security.
In order to decrease our living expenses and increase the amount of money we can use for retirement, we are considering moving out of the state of California where taxes on investment income and social security are high. Sales tax, gasoline and the cost of living are high here. We’re doing our homework now: online research for retirement friendly states, reading books and magazines that recommend locations and finally traveling to visit the most promising sites. We’ve found that there is a lot out there and you can get more for your money than you can in California.
We look forward to being debt free in retirement. It will allow us to enjoy retirement, quit working if we so choose and spend time doing all the things we never have time for.
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