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Can I Retire With Debt?

  • October 1, 2018
  • By Erin Palmer

    Erin Palmer

    Content Marketing Specialist

    Erin Palmer is a content marketing specialist for Suncoast Credit Union. She has written articles for numerous publications and websites, including the Chicago Tribune and Huffington Post. Erin is happiest when curled up with a book, lounging on a beach, or laughing with her family.

    We’d love to hear your thoughts about the blog! Email us and share what you think.

Retirement often brings to mind images of relaxing on the beach or traveling around the world. While this may be the case sometimes, not all retirements are the same. So what happens if you’re approaching retirement but you still have debt?

Retirement is not a “one size fits all” situation. Your financial advisor can help you create a retirement plan that fits your specific needs, which includes handling your debt.

Try to Plan for a Debt-Free Retirement If Possible

In an ideal situation, you would not have debt when it’s time to retire. So if you’re still years away from retirement, now is the time to create a plan to pay off as much as your debt as possible before retirement.

Once you retire, you will be living on a fixed income, so it might be harder to pay off debts. As you’re planning for retirement, take time to figure out a debt management plan.

Some things to consider:

  • Try to pay off expensive or high interest rate debts
  • Make sure you will still be able to afford the monthly payments after retirement
  • Ask your financial advisor if you’re not sure which debt to focus on first

All Debts are Different

When you speak to your financial advisor, you’ll want to go over all of the debt you currently have. During this process, you’ll work together to separate the “good” debt from the “bad” debt.

For example, a credit card with a high interest rate would likely be bad debt that you’d want to pay off as soon as possible. Higher rates cost you more money in the long run.

However, a fixed rate mortgage might be a better debt, especially if it has a low rate. Your home builds equity over time, so a mortgage can be an investment. If you live in an area where the property rates are going up, your home can even increase in value over time.

Consider Retirement Before Taking Out Student Loans

Parents and grandparents sometimes take out student loans for their children or grandchildren to go to college. If this is something that you’re considering, talk to your financial advisor first to make sure that it makes sense with your retirement plan.

Taking on a new loan, especially a large one, might not be the best fit. It depends on your financial situation and the specifics of the loan terms.

Since IRAs, 401(k) accounts, 403(b) accounts and other qualified retirement accounts are not included as assets for federal student aid, your retirement funds won’t prevent your child from potentially qualifying for financial aid. Always make sure your child or grandchild fills out the FAFSA application to see what aid they may qualify for.

Remember that even if you don’t take out the loan yourself, you can still make a plan to help your loved one with the cost of college. You can open savings accounts or work with your financial advisor to create an investment strategy to put towards education. 

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Ready to Make Your Own Retirement Plan? Suncoast Trust & Investment Services Can Help!

Suncoast Trust & Investment Services Advisors are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. . Trust services available through MEMBERS Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America

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