Is a debt free retirement something you have thought about or are hoping to achieve? How different would your life be living debt free in retirement? The good news is that there are some steps you can take, starting today, that can help you achieve a retirement free of financial burdens, so you can live the retirement you dream of with choice and no compromise.
In this article we will cover:
- What a debt free retirement actually means.
- Why you should pursue being debt free in retirement.
- Strategies for achieving debt free retirement.
What Exactly Is Meant By Debt Free Retirement?
For most of us, our vision of retirement is one where we are finally free. Free of stressful deadlines, lengthy commutes, dull meetings and free from the juggle of raising a young family.
It is fair to say that what most of us also assume, is that we will be living debt free in retirement and have enough money saved to enjoy life on our own terms. Sadly, this is very often not the case.
A debt free retirement means not only paying off your mortgage but any personal loans, credit cards, car finance, phone contracts and anything else that has accumulated as personal debt over the years before you stop working.
It is not enough to simply hope that you will achieve this before you retire. It is important to set yourself up for success well in advance so you can enjoy your retirement and all its freedoms.
Collins Mann can help you create a plan to set you up for living debt free in retirement.
Why Does A Debt Free Retirement Matter So Much?
Aside from the obvious benefits of not owing any money, a debt free retirement can also benefit your personal well-being as you head into your golden years. In fact, studies indicate that eliminating debt-related stressors helps you live healthier, happier and longer in retirement. No debt allows travel and hobby options that might not be possible if you’re stilling paying down debt.
Sadly, retirees who have mortgages report feeling insecure about rising interest rates and the prospect of losing their home should their pension or modest retirement income no longer meet the repayments. It’s difficult to put a price on peace of mind, especially if you expect that your family will need to manage your finances and debts at some point moving forward.
At Collins Mann, we offer peace of mind and choice without compromise. Call us today to find out how we can help you achieve your ideal retirement lifestyle.
Strategies for Debt Free Retirement
It’s never too early to think about your retirement and begin to strategise and work towards the retirement lifestyle you want. Even if it seems a long way off, you can start planning for debt free retirement with some simple but effective changes that you can make now.
- Make a comprehensive plan: Of course, the very best thing you can do to secure a debt free retirement is to make a comprehensive plan and stick to it! Start by writing down all of your debts, including mortgages, student loans, business loans, credit cards, personal loans and car finance as well as any phone/Internet contracts. You need to see exactly how much you owe and to whom. You can then work your way through how to reduce these debts or clear them altogether in order of priority.
- Reduce spending on credit: Credit card interest rates are a killer! Where possible, ditch the credit cards altogether. Sure, credit cards are convenient but they quickly accrue debt and added interest repayments. They may have felt manageable while you were working, but it is a good idea to lose this habit before retirement when your income stream shifts.
- Pay your mortgage down faster: Pay more of the principal each month than is required. Even a small amount each month can significantly shorten the length of your loan and save money in interest.
- Consider embarking on some high-risk, high-return investment strategies: This can help grow your wealth and provide an increase in cash flow so you can pay off debts sooner, but a word of warning: speak to an advisor first about which options are right for you or you might find you’ve invested in more of a risk than a return.
- Pay down debts with the highest interest rates first. Saving money on interest helps you pay down debts faster. Start with credit cards and vehicle loans, then move onto the mortgage and any smaller debts.
- Consider debt recycling: With the aid of a financial planner, you can use the equity in your property to invest. This benefits you in two ways: you decrease your non-deductible debt for tax purposes; and you earn additional income to pay down your home loan faster.
“Even small residual debts can become difficult to manage or pay out once your income stream is reduced.”
How Collins Mann Can Help You Retire Debt Free
No matter where you are at in your work-life journey, Collins Mann can help you create a comprehensive plan for your retirement. We are committed to helping our clients enjoy a debt free retirement full of choice and without compromise.
Our fully licensed and qualified team of financial advisors are experts in retirement planning. Should you require additional guidance surrounding self managed super funds, financial growth, asset management or portfolio management, we can assist with that too.
Start preparing for your debt free retirement and call Collins Mann today on 07 3251 3200.