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Transitioning to your days as a retiree is not easy, just like everything else in your life. You are supposed to deal with a ton of things at the same time.
Like,
- Finances for your “free time”
- Any remaining debt
- Emotional well-being, etc.
However, as complex as these things may sound, you can turn the odds in your favor by being prudent with these same things.
So, to help yourself enter your golden days without disturbing your financial stability, make sure to pay the following three things as early as possible.
Challenges As A Retiree:
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You must have heard of the phrase: every action has a reaction!
To relate it to your everyday life, here’s an easy reference, for instance, you woke up early in the morning, hit your foot thumb into something really hard, and…
We can’t even begin to imagine that pain!
No No, don’t worry, we are not going to tell you that your “retirement” is going to be as painful as hitting your foot thumb into something sharp. That’s…absurd, right?
Well, getting back to the point, similarly, as soon as you choose to cease your work for the rest of your life, certain circumstances turn up in uncertain ways.
We call it the “challenges of retirement.”
These challenges, however, don’t necessarily have to be rough or in any way brutal. Instead, it can be as pleasant as a morning walk down the street and vice versa.
Some challenges include:
- Completely transitioning from your work to rest life.
- Finding your “new” self in relatively laid-back days.
- Sorting out how you are going to meet your expenses.
- Getting rid of anything troubled from the past for a peaceful future as a retiree.
And mainly, fidgeting with the ways to pay out the debt, mortgage, or any mistakes of your younger version.
Honestly, the list never ends.
However, all of this doesn’t mean that enjoying relaxing days as a stress-free retiree is just a distant dream for everyone.
No, it’s nothing like that.
It all depends upon how well you have managed your finances and everything in between to make this transition as chill as they show you in movies.
Pay These 3 Things Off Before Retiring
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Retirement planning isn’t an easy thing to do. You need to start working on endless things right from a young age so you won’t have to suffer in your prime time.
However, you can’t be working on anything and everything thinking it will help your retirement.
Keeping in line with the challenges any retiree can face, here are 3 things you should pay off before even your gray-haired days begin.
Doing this will definitely help you meet your stable financial goals and enjoy a content life.
1. Your Credit Card Debt
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The first thing to do before retirement is get rid of credit card debt and work on improving your credit score.
There are many reasons why doing this will turn out to be a better decision for your golden days instead of the other way around.
These include:
- You will wave goodbye to paying high-interest rate
- You can increase your credit limit
- You will enjoy other perks as a responsible payer
And so much more.
However, the main question is, how to deal with credit card debt in the first place?
Well, there are a few useful steps that have worked for many in one way or another.
These include:
- Making use of a secured credit card with a low-interest rate.
- Keeping your balance as low as possible.
- Not opting for services like buy now, pay later.
- Keeping track of your Equifax credit score to pick up any mistake right away.
- Clearing the credit report to keep it error-free.
And so on.
Simple steps like these will help you:
- First, steadily convert your credit score from negative to positive
- Make wise use of your credit card
- Build a healthy credit history
- Check your report regularly
- Update your budgeting and financial planning
Following these tips can help you clear your credit card debt as early as possible, so you plan for retirement in a better way.
2. Your Car Loans
Now, this may sound like a cliché, but car loans can actually hamper your easy-to-go retirement life in one way or another.
The reason is that car loans are considered pretty low to be paid back, unlike other types of loans. However, this doesn’t make auto loans free of the problem they can cause.
This is because
- Your life as a retiree is different from a working person.
- You are not getting your monthly paycheck.
- The percentage of your overall income (investment, passive) might also differ.
However, your monthly expenses are still there and require proper planning.
In other words, you are mostly on your retirement savings, which you obviously don’t want to spend extravagantly, right?
Therefore, to keep things simple with your car loans, read the following points:
- Downsize your car according to your need
- Use the money generated from downsizing to pay back auto loans
- Talk to the lenders and discuss the loan terms
- Increase your wealth in your 30s or 40s to plan your 50s and 60s.
And if you can’t think of anything, negotiate the terms or convert the loan from fixed to flexible and vice versa.
3. Your Mortgage
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Last but not least thing on our list is paying the mortgage loan!
Unlike auto loans, mortgages, if not dealt with in the right way, can turn your golden time upside down pretty badly.
This is not to scare you because, obviously, this is something you can prudently avoid.
To start off with the mortgage payments, you can try
- Talking to your lender to arrange the payment in easy installments with as little an interest rate as possible.
- Changing the loan term.
- Applying for a big loan to handle your current unpaid loan.
- Downsizing your house, of course, depending on your needs.
- Using the money gained after downsizing to pay back the loan instead of trapping yourself in another loan cycle.
In fact, when it comes to paying off things before retirement, your head might be full of endless things. So yes, you’ll be swamped with thoughts on what to focus on first.
That’s why we have made this guide!
See: Get Your Credit Score Ready For Mortgage!
Retirement FAQs:
1. Should you pay off debt before retiring?
The answer is: yes! In an otherwise situation it would become too hard to manage your savings and pay off debt at the same time.
At times, it is beneficial to prioritize paying off debt before saving.
For instance, it will be a wrong strategy if you have high debt and still target filling your savings account. Instead, you should make a budget and plan the finances having a retirement, debt clearance, and savings in mind.
2. What is the biggest expense for retirees?
One of the biggest expenses for many retirees out there is housing, mortgage payment, and everything in between.
Therefore, clearing your mortgage payments as early as possible is the wisest decision at the end of the day.
See: 9 Reasons Your Mortgage Application Was Rejected!
Bottom Line
Money management, debt, taxes, and everything in between can get pretty messy in one way or another.
Especially when you are thinking of early retirement.
Yes, a proper retirement plan needs you to accelerate your planning, expenses, income, and everything.
Don’t worry. We aren’t here to pressure you into making the decisions. Instead, we have made this guide to help you with exactly that.
Want to know how? Read the guide above. :)
We hope that after following the financial tips from our experts, you won’t have to struggle with your retirement anymore.
