- Carrying credit card debt into retirement could leave you struggling financially.
- It's important to rid yourself of that debt before your career wraps up.
Is yours higher, lower, or about the same?
You'll often hear that credit card debt is the sort of thing you should make every effort to avoid. That's because credit cards are notorious for charging large amounts of interest on balances that are carried forward -- and those interest rates can climb over time.
But if you're in your 60s, it's especially important that you do what you can to get out of credit card debt. The last thing you want is to carry a balance with you into retirement and have it hang over your head at a time when your financial picture has changed.
The danger of bringing credit card debt into retirement
The average 60-something has $7,274 of credit card debt, reports Personal Capital. Now, that's a lower average balance than the $9,250 the average 50-something owes. But it's not a small balance, and it's one that can be harmful once retirement kicks off.
During retirement, you may have less spending power than what you enjoyed while you were working. And so the last thing you want is to have to use a chunk of that limited income to keep making payments on your credit card debt. A much better bet is to shed that debt ahead of retirement so it doesn't cause you stress at a time in life when you're adjusting to a new financial situation.
A good way to pay off credit card debt
If you're serious about getting out of credit card debt ahead of retirement, then you'll need to buckle down and start freeing up more money to chip away at those balances. That could mean cutting back on some spending or getting a side hustle.
Incidentally, both could be good exercises during your 60s. You may end up needing to spend less in retirement if your income isn't as robust, so cutting expenses now could be a solid trial run.
And as far as side hustles go, you may decide you need one in retirement not only to supplement your income, but also, to give yourself something to do. So if you're able to get into a groove now, it'll be easy to keep working at that side gig once you retire.
Of course, freeing up cash to shed your credit card debt is a helpful and important thing to do, but there are other tactics you can use to pay off your debt more quickly. One is to do a balance transfer, which allows you to move the balances you have on your existing cards to a new credit card with a lower interest rate. Some balance transfers also come with a 0% introductory rate.
You can also look at taking out a personal loan. That way, you'll typically pay less in interest than you would with a credit card, and the interest rate on your debt will be fixed.
Although you may not be alone in having credit card debt in your 60s, you may also be eager to eliminate it within the next few years. With the right effort and strategies, you may find that you're able to enter retirement free of credit card debt -- even if your current balance is higher than that of the average person your age.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.