Tips for a Debt-Free Retirement
Retirement should be about having a relaxed time with your loved ones, but the inevitable change in your financial situation could be stressful. For many, retirement will represent a reduced source of income that leads to struggling to pay debts, bills, and other expenses.
You may find yourself at the risk of getting into debt – choice causes you stress and worry, negatively impacting your physical and mental health. Your property may be one of your biggest expenses, especially if you have an outstanding mortgage. With equity release you can easily clear off your unpaid debts.
Creating an emergency fund and tracking your spending are only a couple of simple steps you can implement in your life to reduce the challenge of debt for retirement.
Track Your Spending
Tracking your expenses will help you know how much money you’re spending and on what, down to the last penny. Make sure to outline your monthly budget once you know how much you spend a month, planning how much you can afford to spend according to your expenses.
Place a pre-determined amount from your monthly income in a savings account to build up a nest egg alongside your pension.
Pay Off Your Consumer Debt
Make sure to prioritise your debts regarding interest rates; paying off the more expensive debts first ensures that you pay less in interest payments and accelerates your debt being paid off. This outstanding money owed due to purchasing goods and services can set you back financially.
Whether it’s car loans or credit card debt, interest can seriously accumulate and prevent you from building wealth. Your cashflow is impacted negatively, increasing the funding you’ll need to cover your monthly expenses.
Have an Emergency Fund for Retirement
Emergency funds are typically part of short-term saving goals (around one to three years), however, it’s also important to consider them as part of your long-term saving goals. Build up a separate savings account with approximately three to nine months’ worth of living expenses for unexpected situations.
Keep this emergency fund in a separate bank if possible, to reduce the temptation of dipping into this account. Find choice expenses are unnecessary per month and place that money in your emergency fund account.
Being financially secure in later life gives you and your family peace of mind, and it’s never too late to start planning out your finances. At Choice Equity Release we help you find the best plan for your individual circumstances, so you can make the financial decisions you need.