Being a prosperous, capitalist country certainly has its downfalls. For one, a thriving economy and relatively lax restrictions on how businesses operate create grounds for the gullible to be tricked and the inexperienced to make poor choices. And second, people follow through in their demise.
According to one study, more than 70 percent of people aged 56-61 are in debt. Considering that the average American retires in their early 60s, the increase marks a massive problem in how the future elderly will get by in a thriving but grossly imbalanced economic society.
Let’s learn more about how debt is ruining retirement plans and what soon-to-be retirees can do to remedy the solution.
The Danger of Financial Fragility
Per the study above, the 70 percent of people between 56–61 in debt carried a median balance of $32,700, up from $6,760 in 1992. That’s a lot of money to shoulder without regular income and social security to eventually kick in.
These statistics above are in line with the 73 percent of Americans who die in debt, according to a 2017 ExperianOne and creditcard.com joint survey. The average debt total is just under $62,000. Though that number includes mortgage debt, the most common form of debt found was—surprise, surprise—credit card debt.
And this problem isn’t limited to the present-day elderly of society, either. Due to bloated student loans, rising costs of living across U.S. cities, and social security benefits expected to decrease by 2033, it’s likely that many younger people will continue the trend of carrying debts into retirement—and beyond.
These existing circumstances and inevitable future contribute to a growing state of financial frugality in this nation.
How to Remedy Debt Going into Retirement
Embarking on a debt-riddled retirement doesn’t sound enjoyable, but what can be done if facing interest-rate-surging credit balances with soon-to-be diminished income?
One strategy, especially if still earning decent wages, is to practice either the snowball or avalanche method; focusing your effort on paying your smallest balance or highest interest rate first, depending on your goals.
But if debt-to-income ratio has rendered those options worthless, it could be helpful to dial up your creditors. Know how much you owe against what you’re earning, and gather any financial documents that clarify the situation you’re facing. With proactiveness and hard evidence to support your case, ask your creditor to give you a payment grace period, waive your late fees, or possibly, restructure your monthly payment to something more manageable. Depending on the debt you’re carrying, your creditors may or may not oblige, but asking costs you nothing, and could completely alter what you pay in the long run.
Of course, for many struggling to keep their various balances straight, debt consolidation might be a viable strategy. With the help of a debt consolidation company, a larger loan with a lower-interest loan is taken to pay back the various higher-interest balances. This strategy leaves the same amount of debt but consolidated into one monthly payment to make re-payment more manageable.
Then there’s debt settlement, which involves a company negotiating on your behalf to lower your balances. Debt settlement works because creditors want to get paid, and when a debtor’s financial situation illustrates that the chances of a full payback are bleak, many institutions gladly opt to settle the debt for less and still recoup some of what is owed. Keep in mind that despite the amount of legitimate debt settlement companies in operation, many scammers exist. That’s why reputable companies go out of their way to tell prospective visitors about the process, and how a legitimate company operates. This is evidenced by what Freedom Debt Relief reviews and FAQs state.
If you have debt and are nearing retirement, don’t fret. Options exist for you to make progress on your balance(s) and transition to a new life. But if you choose to do nothing, your situation won’t approve. It’s morbid to say, but you’ll die in debt.
Ask yourself: Is this really what I want?