{"id":33026,"date":"2023-11-08T13:07:21","date_gmt":"2023-11-08T13:07:21","guid":{"rendered":"https:\/\/microloannexus.com\/personal-finance\/should-you-be-in-debt-in-retirement-heres-how-you-can-see-if-youre-headed-for-trouble\/"},"modified":"2023-11-08T13:07:25","modified_gmt":"2023-11-08T13:07:25","slug":"should-you-be-in-debt-in-retirement-heres-how-you-can-see-if-youre-headed-for-trouble","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=33026","title":{"rendered":"Should You Be In Debt In Retirement? Here\u2019s How You Can See If You\u2019re Headed For Trouble"},"content":{"rendered":"
\n

As long as I can remember, one of the solid shibboleths in personal finance was \u201cdon\u2019t be in debt when you\u2019re retired.\u201d<\/p>\n

Although I\u2019m not retired, I know that the household math works in your favor if you don\u2019t have monthly payments. My wife and I paid cash for vehicles whenever we could and made every effort to pay down our mortgage early. We also pay off our credit-card balance every month.<\/p>\n

These are still iron-clad principles for a lower-stress financial life no matter how old you are.<\/p>\n

But life has gotten a lot more expensive in recent years. Americans are carrying more than $1 trillion in student debt \u2014 often into retirement \u2014 according to the Federal Reserve, the single-largest consumer loan total behind mortgage loans. Everything from vehicles to health care costs more, especially in the post-pandemic inflation surge.<\/p>\n

Much of the debt burden for retired Americans (65+) has come in the form of mortgage lending, which has climbed from 30% of older households in 1989 to nearly 60% in 2019, according to the Fed\u2019s Survey of Consumer Finances.<\/p>\n

But is debt in one\u2019s seventh decade and beyond such an awful thing? It depends. According to new research by the Center for Retirement Research (CRRC), you have to weigh a number of factors. \u201cThe share of older Americans with debt has been rising since the 1990s, but holding debt in retirement is not necessarily bad.\u201d<\/p>\n

<\/fbs-ad><\/p>\n

\u201cThe question is, how many older borrowers are at high risk of financial distress due to the type and size of their debt?\u201d the CRRC researchers ask. They found that \u201cthe majority of older borrowers are at high risk, but not all high-risk borrowers are alike.\u201d<\/p>\n

Who is most vulnerable? You need to break down the kind of debt incurred the amount of debt relative to income. Those who in are most exposed to debt stress are:<\/p>\n

1) \u201cfinancially constrained,\u201d meaning they don\u2019t have enough monthly income to cover their debts;<\/p>\n

2) credit card borrowers, because they are paying double-digit finance rates on their monthly bills;<\/p>\n

3) \u201ctoo much house,\u201d meaning they can\u2019t cover maintenance and taxes with monthly income; and<\/p>\n

4) \u201cwealthy spenders,\u201d which is a unique group that has above-average income, but is still spending more than they are bringing in.<\/p>\n

Let\u2019s circle back to my original debt-busting advice, which can aid you in achieving a lower-stress retirement. I would boil it down to not carrying credit-card debt, avoiding or paying off installment loans (for vehicles and other things) and paying down your mortgage.<\/p>\n

By the way, the biggest bang for your buck, other than eliminating high-interest rate loans, is to pay down mortgage principal every month. You\u2019ll shorten the term of the loan and can save tens of thousands of dollars in interest. Do the math yourself with an online calculator. You\u2019ll like the numbers now and will appreciate them even more when you retire.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

As long as I can remember, one of the solid shibboleths in personal finance was \u201cdon\u2019t be in debt when you\u2019re retired.\u201d Although I\u2019m not retired, I know that the household math works in your favor if you don\u2019t have monthly payments. My wife and I paid cash for vehicles whenever we could and made<\/p>\n","protected":false},"author":1,"featured_media":33027,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44],"tags":[],"class_list":{"0":"post-33026","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance"},"yoast_head":"\nShould You Be In Debt In Retirement? 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