Retirement and Debt

Piggy Bank with Bandage on Face on Dramatic Gradated Background.A new report from TransUnion found that about 33 percent of U.S. citizens over 60 had debt, and the average balance is $60,000 or more. In 2005 – less than a decade ago – similar statistics showed 22 percent of 60-and-over citizens with debt, and the average debt being around $40,000 per.

Read another way, in the past decade a new generation of 60-somethings have gotten in $20K more debt, and at greater numbers too.

This is undoubtedly a problem, because retirement typically involves living on a fixed income. Suze Orman argues that getting out of all debt is nearly essential to retirement, because it will reduce both (a) money going out and (b) emotional stress.

Orman’s site actually offers an ExpenseTracker which your family can use to plan for the oldest generation’s retirement. If your parents/grandparents are not yet out of debt, try to find $300 or more per month that could be used towards debt reduction.

Typically the biggest issue in retirement financial planning is the home. If the mortgage is completely paid off and that generation wants to retire in that home – assuming access to family, food, and good medical care – that’s a potential win for the entire family. Other families will have to consider down-sizing, be it to a smaller place or a different state entirely (where taxes and debt considerations won’t be as strong). Pitfalls are everywhere in the process, but it can be managed despite potentially high costs.

The easiest way is to sit down and have a transparent discussion with your parents/grandparents about exactly how much money they have, and how much money they need to live (include discussions about travel, etc.) Costs for travel/food will rise in coming years, but hopefully not by a massive amount, so a general framework can be established.

If there are multiple siblings involved in the discussion about parents, designate one as the “primary go-to person.” This could be based on proximity, their profession (financial/legal services/etc.), or simply closeness of relationship. That sibling will be responsible for making sure everyone else is getting the right information about their parents. This makes it easier and prevents any political / sibling rivalry games as the parents get closer to end-of-life.

Financial considerations are paramount within retirement planning, so get ahold of the topics now if you can. Feel free to reach out to Advocare for help with some of these bigger questions and issues.

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