There are many things people may want their retirement to include. Debt is generally not one of them. However, having debt is an increasingly common reality for retirees here in the United States.
This can be seen in statistics from a study from the Employee Benefit Research Institute. Reportedly, in 1998, a little over half (53 percent) of households ages 55 and over held debt. In 2016, the portion of households in this age group that had debt jumped to over two out of three (68 percent).
Debt could pose challenges to retirees. For one, debt payments can eat into retirement savings, reducing the amount of money a retiree has for his or her other goals. Also, debt, particularly when it is at high levels, could make retirees particularly vulnerable to facing significant financial difficulties when unexpected expenses come up.
So, how retirees deal with debt is very impactful. Given this, when entering retirement with debt, it can be important for individuals to:
- Have an accurate picture of their overall financial situation, including how much in savings and debt they have
- Think carefully about how they want to tackle their debt and what sort of repayment strategy would best fit with their goals and situation
- Set out a budget strategy for how to handle their monthly expenses during retirement, including their debt payments
Planning ahead could help with preventing debt from triggering significant retirement problems. However, sometimes even when diligent planning has occurred, circumstances can lead to debt shifting from manageable to overwhelming for retirees. When this happens, coming up with a new plan is important: A plan for how to promptly and effectively address the debt problems. Such a plan could include many things. In some situations, personal bankruptcy might be part of such a plan. Skilled bankruptcy attorneys can give individuals guidance on bankruptcy options and how well-suited such options would be for their debt circumstances.