Getting Your Credit Back On Track In Retirement

Retiring with debt is quickly becoming the norm. In a study published by the American Economic Association Papers and Proceedings, 70 percent of Americans aged 56-61 years old were in debt, carrying an average of $32,700 in outstanding balances. For most retirees, the loss of employment income further compounds the task of repairing your credit and debt issues in retirement. It has become a common part of planning for real life after your retirement. However, there are ways you can repair your credit and still achieve those retirement ideals you have been planning all these years.

Getting Your Credit Back On Track In Retirement

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Consider Debt Consolidation and Refinancing

Credit card debts are one of the highest debt most Americans carry with them into retirement years. With credit providers raising rates and balances hitting an all time high, the possibility of repaying the full amount seems much more daunting. In retirement, most people rely on their social security benefits and residuals from an investments made prior to retiring. The Social Security Administration reports that social security benefits accounts for 33 percent of the income for seniors. With a lower fixed income, making those debt repayments can become difficult and the added finance charges definitely do not help. This is where making use of the multiple resources online offering options to restore credit can help.

With this in mind, consider lower or zero percent interest options. Providers often offer promotional zero percent interest on balance transfers for credit cards while other loan providers can offer lower interest rates for those looking to consolidate their debt into one payment each month. With a little bit of researching, you could be reducing your debt payments by hundreds each month and on your way to financial freedom sooner than you may think.

Chart Your Debt

A handy trick for anyone looking to get themselves into a better financial position, Crediful recommends charting your debt to help you get a handle on your out goings and debts with the highest interest. Once aligned, you can then focus on tackling those debts costing you most first and getting back on track with making your payments on time. By removing those with the highest interest rates, you are improving the chances of making on time payments and being debt free sooner. A debt chart is a great addition to a household budget and essential in a debt repayment plan.

Go Frugal

With a fixed income in retirement, this means some of your habits will have to change as well. Going frugal can apply is several areas of your life. Consider downsizing your home once the kids are out of the house (and downsizing your mortgage payments) along with simple, everyday adjustments. Shop smart and with a meal plan when shopping for groceries and explore some passive options for retirement income. Creating additional streams of income will allow you to add to your nest egg or make it last longer. Finally, adopt frugal spending habits such as keeping your credit card balances below the recommended 30 percent utilization and incorporating budgeting into your daily life.

 

Of course the ideal solution would be to implement these plans in the run up to retirement and thereby, repair your credit before you begin your retirement. At any age, it is important to monitor your credit reports and pay attention to your credit scores. What’s more is that your employment status and age do not affect your credit scores at the end of the day. There is hope for repairing your credit issues at any age and armed with these tips, you are sure to be off to a great start.