Is High-Interest Credit Card Debt a Threat to Your Retirement Planning? 4 Ways to Get Back on Track
Worried about carrying credit card debt when you retire? You’re hardly alone.
The good news? There are steps you can take now to get control of high-interest credit card debt and be in solid financial shape for retirement.
Lower your interest rates. Individuals age 75 and older have the highest average credit card debt — $8,100. Rising interest rates can make carrying a balance quickly add up. Consider switching to cards that offer 0% APR on balance transfers or no interest during an introductory period. This gives you more time to pay off a balance without accruing more interest.
Spend less than you make. From the latest tech trend to a lavish vacation, “immediate gratification”
Expenses can put a huge dent in your ability to save for retirement. The solution? Live below your means while you’re still working. This may free up some funds to pay down high-interest credit card debt.
For example, create a budget using a portion of your current income. If your household currently has two incomes, try basing your budget on just one and bank more of the second income.
Work longer. Continuing your employment for a few years more can benefit you twofold: You’ll help reduce the need for cash during retirement and delay cashing in on your Social Security benefits.
Waiting until you reach full retirement age makes it more likely that you can collect 100% of what you’ve built up. For example, if you start collecting at 62, and your full retirement age is 66, you may miss out on 25% of your maximum benefit every month for as long as you live — and that adds up to a significant amount. Collectively, this too could help free-up cash to alleviate the burden of high-interest credit card debt.
Look into a reverse mortgage loan. It’s no surprise that paying off credit card debt can be difficult for retirees living on less income. But the equity in your home can be an important asset and provide security during retirement — if you can access it.
With a reverse mortgage from Reverse Mortgage Funding LLC (RMF), older homeowners can convert a portion of their home equity into a useable resource, freeing up money to reduce higher-interest monthly bills, refinance an existing mortgage, make home renovations or cover medical care and/or in-home care.
Unlike a traditional mortgage, a reverse mortgage has a flexible repayment feature: It provides the option to make no monthly principal and interest payments, as long as at least one of the borrowers lives in the home as their primary residence and loan obligations are adhered to (including property taxes, insurance, and maintenance). Speak with an experienced reverse mortgage specialist from RMF at (888) 277-1567 to learn more.
“Financial planning research has shown that coordinated use of a reverse mortgage starting earlier in retirement outperforms waiting to open a reverse mortgage as a last resort option once all else has failed,” explains Dr. Wade D. Pfau, CFA, college professor and founder of the Retirement Researcher. “Reverse mortgages have transitioned from a last resort to a retirement income tool that can be incorporated as part of an overall efficient retirement income plan.”
Live the retirement of your dreams
For most people, retiring 100% debt-free is not a realistic goal. By leveraging assets such as your home equity, you can improve your cash flow and help ensure that a more comfortable retirement lifestyle is within your reach.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans live the retirement lifestyles that they imagined and deserve, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 5-star / Excellent score on Trustpilot; 4.5 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call (888) 277-1567 to speak with one of our experienced reverse mortgage specialists to learn about our retirement financing products and solutions.