14 Key Debts to Pay Off Before Retirement

Retirement should be a time of relaxation and financial security, not stress over lingering debts. Carrying certain obligations into retirement can drain your savings, limit your lifestyle, and create unnecessary financial burdens.

By strategically paying off specific debts before leaving the workforce, you can ensure a more stable and worry-free retirement. Explore the most important debts to eliminate before retirement and offer strategies to help you achieve financial independence.

Mortgage or home loans

Carrying a mortgage into retirement means large monthly payments that eat into your savings. Paying off your home loan before retiring can give you peace of mind and cut down on expenses.

This needs to be a priority before you stop working. Without a mortgage, you’ll have more freedom to enjoy your retirement without worrying about a major bill every month.

To learn more: What do I do if I can’t afford my rent or mortgage?

Credit card debt

Credit card debt is one of the most expensive types of debt, with high interest rates that make it hard to pay off. Carrying this debt into retirement can drain your fixed income quickly.

Clearing it before you stop working keeps your budget stable and avoids unnecessary stress.

To learn more: Can I really live without a credit card?

Personal loans

Personal loans may have lower interest than credit cards, but they still take a chunk out of your monthly income. Paying them off early frees up cash for essentials and savings. The sooner you get rid of them, the easier it will be to manage your retirement income.

To learn more: Consolidating Debt 101: What You Should Know

Auto loans

Car payments can take a big bite out of your retirement budget. Getting rid of this debt before you retire means fewer bills and more financial security.

If you own your car outright, you won’t have to worry about making payments on a fixed income.

To learn more: Is a Car an Asset or Liability?

Student loans (if applicable)

Student loans can be a heavy burden, even later in life. If possible, pay them off before retirement so they don’t cut into your savings.

The same holds true for any student loans taken out for your own kids. A debt-free retirement means keeping more of your money for what matters most.

To learn more: How to Pay for College Without Loans and Student Debt

Medical debt

Healthcare costs don’t go away in retirement, and carrying medical debt makes things even harder. Paying off what you owe before retiring keeps your finances stable.

Get on a payment plan to pay off your medical debt. It also helps you avoid high-interest payments that add up over time.

To learn more: What do I do if I can’t afford healthcare or insurance?

Home equity loans or HELOCs

Borrowing against your home may have helped with expenses, but keeping this debt into retirement can be risky. These loans often have variable rates that can rise, making payments unpredictable.

Paying them off ensures your home remains yours without extra financial strain.

To learn more: Top 15 Genius Ideas on How to Manage Debt Effectively

Business loans (if personally liable)

If you’re personally responsible for a business loan, it could follow you into retirement. Paying it off before leaving the workforce protects your personal savings. It also prevents you from having to use retirement funds to cover business debt.

High-interest consumer debt

Any debt with high interest eats away at your income and makes it harder to retire comfortably. Getting rid of it before retirement means fewer financial worries. The less money you owe, the more you can enjoy life on your terms.

To learn more: Debt Snowball vs. Debt Avalanche – Which Method is Best?

Outstanding tax liabilities

Owing taxes in retirement can lead to penalties and even garnished Social Security payments. Settling tax debt early keeps your finances in order and avoids future headaches.

A clean tax record makes for a smoother retirement.

To learn more: Why Do I Owe Taxes This Year? 10 Reasons To Spot

Co-signed loans (if at risk of responsibility)

If you’ve co-signed a loan, you’re on the hook if the borrower stops paying. Paying off or removing your name from these loans before retirement prevents surprise financial hits. It also ensures your retirement savings stay safe.

To learn more: What’s the difference between good debt and bad debt?

Payday loans or cash advances

Payday loans come with sky-high interest rates that can trap you in a cycle of debt. Carrying these into retirement puts a serious strain on your fixed income.

Paying them off quickly saves you from long-term financial trouble.

To learn more: 5 Reasons NOT to Choose the Popular Debt Snowball Method

Unpaid utility or service bills in collections

Even small bills in collections can damage your credit and lead to legal trouble. Clearing these debts before retirement keeps your financial record clean. It also helps prevent disruptions to essential services.

To learn more: Best Debt Apps To Payoff DEBT

Any other recurring debt with high interest or financial risk

Any debt with high interest or unpredictable costs makes retirement harder. Paying it off before leaving the workforce means fewer financial surprises.

The goal is to retire without worrying about debt eating into your savings.

To learn more: Coming up on Retirement Age with No Savings? Learn What to Do Now

Time to Budget to Pay off Debt

The best way to get rid of debt before retirement is to make a plan. Setting a budget and sticking to it helps you pay down what you owe faster. A little planning now means a lot more financial freedom later.

Follow Money Bliss for practical advice, creative ideas, and the motivation you need to stay on track. Let’s make your retirement dreams come true.

To learn more: Top 20 Genius Ideas to Budget to Pay Off Debt

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