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It is true that when you retire, your income drops significantly. That’s because retired people are no longer receiving a paycheck from work. Additionally, how much money you get from Social Security depends on how long you were a member of the workforce and how much money was in the system when it was your turn to collect benefits.

However, many retirees also have debt they’re still paying off. And while it may seem daunting to think about how you’ll pay off your debt in retirement when your income is lower, it’s not impossible.

Seven Steps to Paying off Your Debt While Retired

If you want to retire with a clean slate, how do you pay off the debt in retirement? It’s not so hard. Here are seven steps that will lead you to the goal of eliminating your outstanding debts.

Review Your Current Debt Situation

The first step in paying off debt is to take a good, hard look at your current debt situation. This includes how much debt you have, the interest rates you’re paying on that debt, and how much money you have coming in each month. Getting an idea of what you’re working with will help you get a good idea of what steps you need to take to become debt-free.

Calculate Living Expenses

Next, you’ll want to calculate your living expenses. This includes everything from rent or mortgage payments, to groceries and utilities. Knowing how much money you need to live each month will help you stay on track with your debt payoff goals. This will also help you determine how much money you’ll need to have saved up in retirement.

Increase Income

If you’re struggling to pay off your debt while you’re retired, then you’ll need to find ways to bring in more money. This could mean taking on a part-time job, selling some of your belongings, or finding other ways to generate extra income.

Reduce Expenses

On the other hand, you may want to look for ways to reduce your expenses. This could mean canceling cable, eating out less, or finding cheaper ways to do everyday things.

Commit to a Debt Reduction Plan

A debt reduction plan is only effective if you’re able to stick to it. This means setting aside money each month to put toward your debt and committing to not borrowing any more money. The overall goal of this is to become debt-free as quickly as possible.

Monitor Progress and Make Adjustments

It’s important to monitor your progress and make adjustments as needed. This could mean tweaking your budget if you’re not making enough headway or increasing your payments if you’re able to afford to. The key is to be flexible and willing to make changes so you can reach your ultimate goal of becoming debt-free.

Celebrate Your Success

The final step is to celebrate your success! Once you’ve paid off all your debt, take some time to enjoy your newfound freedom. You may want to take a trip, buy a new piece of furniture, or simply relax and enjoy your newfound peace of mind.

Debt can be a major drag on your retirement plans, but it’s not impossible to get rid of it. Following the seven steps above will help you develop a plan to pay off your debt and achieve financial freedom in retirement.

How Can CreditAssociates Help?

If you’re looking for a way to reduce your debt by up to 50% or more, CreditAssociates can help. We offer a proven debt settlement service that allows you to resolve your debt for less than what you owe. And our money-back guarantee ensures that you’re satisfied with our services.

We understand that retirees may have limited income, which is why we offer a variety of payment options to fit your budget. We also don’t charge any upfront fees, so you can be confident that you’re getting the best possible value for our services. Learn more about how it works to find out how you can reduce your debt while you’re retired.

Common Questions About Debt in Retirement:

Can I retire with debt?

While there is nothing preventing you from retiring with debt, it’s not advisable. Retirement is typically a time when you’re no longer working and have less income coming in. This can make it difficult to manage debt payments on top of other living expenses.

How much savings does the average retiree have?

The answer to this question can vary greatly, but a 2019 study by the Federal Reserve showed that the average 55–64-year-old had around $408,420 in their retirement account. It is important to remember that this number is simply an average and not necessarily indicative of what you will have.

At what age should you be debt-free?

There isn’t one age where everyone should be debt-free, instead people should aim to be debt-free by the time they retire. This will depend on your individual circumstances, but typically you’ll want to have paid off your debts and started saving for retirement well before you retire.

What is the biggest expense for most retirees?

One of the biggest expenses that a retiree faces is health care. Once you retire, you are often faced with a sharp increase in what you have to pay to be covered by health insurance and other medical expenses. This can be a major strain on your budget, so it’s important to plan for it.