How to Keep Debt from Haunting Your Retirement

Late in your career, one of the most daunting parts about determining if you’re ready to retire is figuring out if your savings will be enough to take care of all those bills that may start going “bump” in the night after you stop working.

By Rebecca L. Bennett

 

Paying off preexisting debt before you retire can help your benefit payments stretch a lot farther. To that end, here are expert-recommended ways to keep debt from haunting your retirement:

Take Inventory of Your Income & Expenses

As you start to prepare for retirement, one of the first things you should do is calculate your total retirement income. We make estimating your TCDRS benefit easy in your online account, but be sure to include streams of income you will have from other retirement accounts and Social Security, too.

Next, take inventory of your expenses. Be sure to include your current bills and debts, such as your home mortgage, as well as additional costs you expect to incur during retirement, like a new car loan.

It’s also a good idea to factor in health care expenses, which tend to rise as you get older.

Develop a Game Plan

After your inventory is complete, ask yourself: “Will I be able to pay my bills and live comfortably if I stop working on my ideal retirement date, or should I work a little longer to let my benefits grow and pay off some of my debt first?”

While it’s ideal to enter retirement debt-free, that goal may not be attainable. At a minimum, experts recommend addressing high-interest debt, such as credit card balances, before retirement.

Whether you target your student, car or home loans next will depend on your situation and outlook. Some people prefer to throw everything they have at accounts with the largest payments to free up the most income, while others gain more confidence and motivation from paying off smaller-balance accounts first.

Ask the Experts

A financial advisor can help you come up with a game plan that puts you in the best position possible before you retire. They can show you how to keep paying off debt and saving in retirement, too.

Keep in mind that our Member Services Representatives are always available to answer your questions about your TCDRS benefits. You can call us anytime during business hours at 800-823-7782.

If you’re thinking about retiring soon, we also highly recommend scheduling an online counseling appointment. During your session, one of our friendly representatives can walk you through your options, help you run benefit estimates and more.

Personal Finance Retirement Prep