New Jersey residents approaching retirement may wonder when they will be able to retire in light of debt that remains unpaid. Credit card debt and student loans weigh in as two debts that some older individuals may still need to pay off. Some baby boomers may benefit from mapping out their finances before retirement.
Today older Americans owe nearly $43 billion in unpaid student loans for themselves or their children. In 2005, this amount was $8 billion. One plan for reducing student loan debt is to increase the time to pay off the loan. Another is to check into other ways to reduce the debt. It may be advisable to encourage children to borrow for their own education. Helping them and becoming dependent on them later on may not be a good idea for parents or children.
Fewer boomers have finished paying off their mortgages than in previous years. It may be comforting to do so, but getting a tax break with interest deduction on the mortgage helps. It may seem a good idea to pay down the mortgage, but withdrawing money from a retirement account may end up costing more in penalties. Downsizing may be a wise choice or renting without the burden of a mortgage.
Boomers, on average, have high credit card debt. Saving the card for an emergency may be a good idea, but using it too frequently may hinder retirement. Using cash to shop may show where the money is going and highlight ways to save.
The decision to delay retirement may be based on how much debt a boomer has. If credit card debt is too high, an attorney may be able to offer insight into ways a debtor might pay it off or discuss options for relief, such as bankruptcy.
Source: FOX Business, “Boomer Retirees Need a Hand Paying Down Debt“, Casey Dowd, October 09, 2014