How to Deal with Retirement Debt
Retiring at the end of a long working career should be a carefree time where you can sit back and enjoy a slower pace of life. Yet more and more people are retiring in Australia whilst still having large debts – many of them still owing tens of thousands of dollars. In this article, we’ll discuss how to deal with retirement debt.
Retirement debt can come in several forms but the most common are:
- Credit cards
- Bank loans
If you’re wondering how to deal with bad credit during retirement, don’t panic. This is becoming increasingly common and there are ways that you can rid yourself of retirement debt. Bad credit doesn’t have to ruin your retirement.
Take some of these simple steps if you’re considering how to deal with bad credit during retirement:
If you’ve got savings or extra from your pension, use it
Although you may have always set aside your savings with dreams of more frivolous purchases such as a boat or endless travel, the best thing you can do to deal with bad credit during retirement is to use your savings to pay the debt off.
This makes sense – especially if your debt has a high rate of interest, which will simply increase the overall amount you pay back on your debt.
Consider working part-time
If you’re thinking about how to deal with bad credit during retirement, it may be worth asking yourself if it’s the right time to actually take your retirement. If you still have a strong capacity to work and you’re able to do so, why not go part-time so that you can keep enough money coming in to help pay off your debts? This will mean that when you do finally fully retire you can do so with peace of mind and improve your credit rating.
If you haven’t already done so, think carefully about where all your money is going. Without a salary coming in each month, you’ll be relying on your pension and any savings. Now think about what expenses you have and where this money is being spent.
It’s likely that you can make cutbacks somewhere – even if you have set costs such as utility and food bills, you may still spend money unnecessarily on luxury items or could cut back on amounts of services that you use.
Switch your debts
By shopping around, you may be able to find cheaper deals for your debt. If you’ve had your debt for a long time, your rates of interest may have been the same or even increased – whereas switching to another loan could be how to deal with bad credit in retirement, even offering you zero interest.
If you’re overwhelmed by the choice of loans out there, don’t panic. At Loans for People with Bad Credit we can help you to find the best loans for bad credit.
Claim benefits you’re entitled to
You’ve worked hard your whole adult life, you’ve probably earned certain benefits which you should take advantage of now that you’re at the point of retiring.
Many people retire without being fully aware of the funds that they could be receiving for no extra cost and minimal hassle. Check out whether you’re entitled to benefits and consider these as a way of contributing to the fight against bad credit during your retirement.
Downsize or rent a room
If you have a family but the kids have grown up, then chances are you’ll be living in a home that is far bigger than you currently need. If you’re considering how to deal with bad credit during retirement you may want to think about downsizing your home – this can free up a huge amount of cash and enable you to pay off debts and improve your credit rating for future borrowing.
Sometimes people who have retired are keen to keep their family home for grandkids coming to stay or simply for sentimental reasons. If this is the case, you should think about whether you can rent out a room or take in a lodger to help contribute to bills and overall running costs.
Ask for help
Retirement should be restful – so don’t let bad credit during retirement ruin it all. There are lots of ways to get yourself on track financially and head into your retirement feeling financially confident.
Asking for help is one of the best things you can do. At Loans for People with Bad Credit, we have spent years working with people of all ages who have bad credit and we can help offer advice and support for how to move forward with greater peace of mind.
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