Three Financial Threats to a Peaceful Retirement

Three Financial Threats to a Peaceful Retirement

After spending all your life in the rat race, retirement is supposed to be the time when you can kick back, relax, and rest on your laurels. Unfortunately, the grim reality for many is that retirement is hardly a time of relaxation. Many retirees have debts that are almost impossible to maintain on a retirement income. As a result, many are reentering the workforce just to make ends meet, when they should be chilling in a condo in Boca Raton.

If you are not sure how much you will spend in retirement there is a calculator at Industry Super. Or take a look below at some common pitfalls to a debt free retirement, and ways to deal with them.

Below are some common pitfalls to a debt-free retirement, and ways to deal with them.

Credit Card Debt

If you have been using credit cards as a source of income, such as borrowing against the card or using your line of credit for living expenses instead of your income, you could end up stuck in the vicious cycle of borrowing and paying but never really catching up.

If you have not retired your best option is to pay down or eliminate as much of the credit card debt as possible so that you can retire with a fairly clean slate.

If you have already retired then you need to focus on getting those credit cards paid off as quickly as possible. If your retirement income is not sufficient to pay all of your bills, especially if you have already taken hits on your credit, you might want to speak to a credit repair company like Lexington Law find out your options for cleaning up your credit report.

Another option is to transfer the credit card balance to another low interest card. If you choose this option you should stop using the card that you transfer the balance from, or at least reserved for emergencies only, and not make any new purchases on the new card because the interest-rate that you get for the balance transfer might not fly to new purchases.


Mortgages are one of the biggest threats to a financially peaceful retirement. While it is true that making mortgage payments does give you certain tax advantages, those advantages are really worth it when you take into account the monthly expense of the mortgage – especially if your retirement income is significantly less than what you were earning when you were working.

If you have not already retired, one solution would be to try to pay off or significantly pay down the mortgage before your retirement. That way you won’t have that extra monthly expense, and if you do have the expense it will only be for short time and it might be easier to budget for it .

If you have already retired, one solution might be to look into a reverse mortgage. With a reverse mortgage you are essentially selling your house to the bank , in return they pay you either in one lump sum, in monthly payments as long as you live in your home , pay all required taxes and fees, and maintain the property. When you move out of the home , the property automatically goes to the bank. The biggest advantage to reverse mortgages that you get to stay at your home without having a hefty monthly mortgage payment. The downside is that if you want to leave the property to your heirs, they will have to pay off the remaining balance.

Another option would be to sell your current home and downsizing to a property with a smaller mortgage, or you can try to refinance your current property to lower monthly payment. Of course both options mean that you will essentially extend the life of the mortgage. It can lower your monthly expenses, but you’re also still in the same boat of having a mortgage that you have to pay when that money could be better used elsewhere.

If you’re concerned about your mortgage, you should speak with a financial advisor can go over these options as well as find other options to reduce your monthly expenses.

Your Children’s Debts

This includes any student loan payments that you’re helping them make, any loans that you may have cosigned, and any other financial assistance you may be giving them. This is not to suggest that you should completely cut them off , but you may need to work with them to reduce the a lot of money that you are giving them each month.

For example, if you have cosigned on a car loan and they have stayed current on the payments and have a decent credit rating, it might be time for them to refinance and put the loan and their names alone.

If your children are still in the stage where they are having financial difficulties of their own, you may need to work with the financial counselor to find a solution that works for everybody.