It is important to clear a big part of your debt before you retire. Retirement usually means that you will not have the same income and financial means as you’ll give up on your daily job.
When it comes to debt, credit card loans are notorious for their high interest rates. An average American has a credit card debt of about 3,000$ a year only in interest costs. The minimum payment which you’ll have to make every month comes to 250$. If you have a steady job that pays well, these costs can be easily covered. However, on a pension of 1000$ it becomes a serious financial difficulty.
Many Americans had to take a mortgage loan to afford a house or an apartment. Mortgage loans make a big part of the total debt every household has. Paying your mortgage loan before retirement must be a priority!
Student loans are taken in the hopes that a college degree will help you find a high quality job that pays well. Many see it as an investment. Investing in education is a good idea, but you still have to pay back your debt. Take care of student loans as soon as you have the financial means to do it!
Debt always comes with stress. Retiring should be a time of peace and relaxation. Unpaid loans put a lot of emotional pressure on you and stress leads to many medical issues like heart diseases.
How can you cover all your loans before you retire? Before borrowing money think of the consequences that such an action will have on your financial life. Always save for retirement and try to take as many loans as possible! It is a good idea to have first a solid retirement fund and then pay for your children’s college education.