Are you putting of saving for your retirement until your 30s or 40s when you’ll be “making the big bucks?” It’s fine if you are – just expect to have a pretty sad/old retirement. That said, if you start cutting budgets now and finding ways to save (regardless of age) you fill find that the earlier you plan for your retirement years, the sooner you’re able to leave the workforce. Plus, starting early has a tremendous impact on the size of your nest egg. The more you’re able to save today, the better your future lifestyle.
The truth is, putting off retirement planning can leave you ill-prepared. But even if you start saving early in life, too much consumer debt can affect how far you’re able to stretch your retirement dollars.
It’s estimated that we need between 70% and 90% of our pre-retirement income to get through the retirement years with ease. Unfortunately, if you have a lot of credit card debt and several loans, this can hinder your retirement plans. And after you’re able to retire, you might have to find a part-time job to make ends meet.
There is, however, good news. Debt doesn’t have to impact your retirement life. Start planning today and you can eliminate debt before you retire.
1. Make an extra mortgage payment.
Housing is probably your largest monthly expense. And for some people, retirement isn’t possible for as long as they maintain their current house payment. However, if you plan ahead, you might be able to eliminate this debt as you move closer to retirement.
Did you know that making one extra principal payment a year can reduce your mortgage by seven or eight years? For this to work, you’ll have to pay one-half of your mortgage payment every two weeks or increase each monthly payment by 1/12. Both approaches are the equivalent of one extra payment a year.
2. Avoid credit card debt.
Credit card debt is another factor that can have a tremendous impact on the quality of your life after retiring. There is nothing wrong with having a credit card or using your card on occasion. Just make sure that you pay your balance in full each month. This way, you can avoid interest charges and huge debt.
3. Keeps auto loans to a minimum.
Understandably, most people don’t have enough money to pay cash for a car. But just because you’re able to finance an automobile doesn’t mean you should buy a car at the top of your budget.
At the end of the day, a car is simply a means to get from point A to point B. And although it’s important to select a reliable automobile, be reasonable with how much you spend.
4. Get professional debt help.
Debt may hang over your head today, but if you take the right steps, you can eliminate balances and get your finances on track for retirement. The less you owe, the more cash you’re able to keep in your pocket.