Society's notion of retirement is often one of relaxation and pursuing our passions after decades in the workforce. But that's not the reality for many seniors. Many have difficulty saving enough to cover their basic living costs, and some are struggling under the weight of mortgages, credit card debt, medical bills, and more.
Even a small amount of debt can be stressful for those who weren't able to save much throughout their careers. And I'll be honest: There's not always an easy fix. But here are five things seniors can try to maintain their financial security when retiring with debt.
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1. Consider a part-time job
Yes, I know some won't consider it a true retirement if they're still working. But holding on to a part-time job can be a great way to ease into a full retirement if you don't have a lot of personal savings. That steady paycheck can give you peace of mind and help you chip away at your debt.
You don't have to choose a job that's in your current field; find something that aligns with your interests and talents if you prefer. Think about how much income you need from your job and how much you're willing to work to narrow down your options.
2. Reduce spending, if possible
Reducing spending is a great way to free up extra cash for debt repayment if it's an option. The trouble is, many retirees are already struggling to cover their bills as it is, and they might not have any income to spare. If you're in this situation, you might have to rely upon some of the other tips mentioned here.
If you can cut back on discretionary purchases, put that extra money toward your debts until you've paid them off. Then, you can go back to using the extra cash however you wish.
3. Consider a personal loan
A personal loan might be a good fit if you have credit card debt. These loans don't require any collateral and give you a predictable monthly payment. Interest rates are higher than what you typically see with auto loans or mortgages, especially for those with poor credit. But you won't have to worry about your balance ballooning each month, like you do with a credit card.
It might be trickier for seniors who aren't working to find a lender, but some companies still provide loans to retirees. Shop around and compare options from a few lenders. Look at the interest rate, the loan term, and any closing costs you'll pay to determine which lender provides the best overall value.
4. Consider downsizing your home
It might be possible to get rid of your mortgage by downsizing your home, if you can find a more affordable place. Even if you can't get rid of your mortgage entirely, you might be able to secure a lower monthly payment by moving to a cheaper place. Refinancing your existing mortgage is another option, but it's best to do this when interest rates are low.
There's more than just finances to consider when talking about a major move like this. You also need to think about how attached you are to your current home and neighborhood, and whether there are even more affordable options in the area you're interested in.
But it doesn't hurt to see what's out there. You can always stay put if you decide a move isn't right for you.
5. See if you qualify for government assistance
Several federal programs can help low-income individuals and seniors cover their bills, including the Supplemental Nutrition Assistance Program (SNAP) for food costs, and Medicaid for medical bills.
These might not directly reduce any debt that you have. But they can reduce your monthly costs, which could free up cash for debt repayment.
Think about what you need the most help with and check into programs at the federal, state, and local levels to see what sort of assistance is available. If you have questions about eligibility requirements or benefits, contact the program office directly.
Lastly, it's important to note that debt in retirement isn't always a huge problem. If you knew you were going to carry debt into retirement -- a mortgage, for example -- and you budgeted for it, it's not a big deal.
But if you have unplanned debts or you think you're putting your financial security at risk, it's worth trying some of the steps above to see if they can help you.
