Retirement is something we should all be able to look forward to. It’s a time when, as long as our health allows, we can stop working and look at trying other things we might always have wanted to do but not had enough time to get around to. Once working is out of the way, what’s stopping you from following your dreams? 

The answer is, sadly, very often money. Money is always going to be a little tight in retirement because you no longer have an income, but if you have saved hard and organized your finances, it should be too much of an issue – you might have to cut back a bit, but you can still have a fantastic time and follow a lot of your dreams. 

That is, of course, unless you are going into retirement with a lot of debt. Some debt is manageable, but if you have a lot and you used to rely on your income to cover the payments, once that income is no longer there, you’ll find you have problems. This is why it’s a good idea to reduce your debts as much as possible before you retire so you don’t even have to think about it. Read on for some ideas about how to do that. 

Photo by Karolina Grabowska

Look At Your Figures 

Before you can do anything useful, you’re going to need to know exactly what your situation really is. It might be that you owe a lot less than you thought or that you actually owe more. As uncomfortable as this realization might be, it’s important to know because unless you know, you can’t do anything about it. 

Take each debt and list them out in a spreadsheet to see what is still owing and how long it will take you to pay the money off. In this way, you’ll have a timeline that will help you estimate how long it will be until you can retire (assuming you keep paying your debts at the rate you are currently paying them). Again, this might not be what you were hoping for, but it’s better to know than to try and retire, only to find that it was a mistake. 

Focus On Repayments 

If you really want to be debt-free before you retire, then knowing your figures is important, as we’ve said. However, you’ll then need to work out a repayment plan that suits your budget and your finances. In other words, if you’re currently only paying off the minimum amount on every debt every month, it’s time to pay more so that you can get rid of the problem much faster. 

The best way to do this is to choose one credit card or loan and focus on that while still continuing to pay the minimum on all the other debts. Pay as much as you can on this one debt each month, putting as much of your money into it as you can – anything that won’t leave you in financial problems. This will reduce the debt much faster, and when it’s done, you can move on to the next. Start with the debt with the highest interest rate, as this will save you the most money over time. Alternatively, start with the smallest debt because you’ll pay it off more quickly, and psychologically this will give you more motivation. You’ll need to see what works best for you. 

Ask For Advice 

If you have read about all the things you could do mentioned above and you’re still not sure that you could be debt-free by the time you plan to retire, the best thing to do is speak to a professional to get some advice. Your retire is meant to be a time of fun and enjoyment, and if you’re still worried about debts and you’re financially tied up, you’re not going to be able to do all the things you really want to do. 

There are a number of different people you can talk to. You might discuss selling your home with a real estate agent, so you can downsize and pay off your debts quickly – any additional cash can be used to enjoy in your retirement. Or perhaps you need to speak to a bankruptcy law firm if things have reached a point where you know you can’t pay back what you owe. If this is the case, do it sooner rather than later. Bankruptcy lawyers understand what you’re going through, and they will not judge – they will, however, help you get a better life moving forward.