24 Feb

Retirement WorriesYou Can Manage Debt and Still Retire

Prior to 2008, retirement was an eagerly anticipated milestone for many people. The state of the economy, however, changed that. Although retirement is still possible for many, there are caveats:

  • Be realistic about your retirement needs.
  • Spend less than your income.
  • Take control of how much and when you spend.
  • Retain an emergency fund.

Navigator Financial Planning Services can help you gain perspective on the past and make a plan going forward. Learn more about the role of a financial advisor and how we can help. Then, take action with the following tips for staying on track.

Balance Your Retirement Budget

Whether you are currently retired or hoping to retire within the next few years, you may be facing a scaled-back retirement lifestyle. Living within your means is the current catch phrase. To do that you need to take a realistic look at the fact that you may still have debt in retirement. Sure, you diligently set aside money for your retirement nest egg, but it may not go as far as you once planned. So, rethink the possibilities.

Start by creating a budget that accommodates less income than you anticipated. The old concept of spending less than you earn has become new again. With a little creative financial planning your retirement aspirations can be attained. These are some ways to control how much you spend.

Reduce high-interest debt. The first debt to pay down is, of course, credit cards. Pay all your bills on time and try to never charge more than 30% of a credit limit. Make sure what you are buying is something you need, not just something you want.

Downsize. Think about moving to a smaller home with less maintenance. Smaller homes can help you save on mortgage, taxes and insurance, in addition to upkeep. Moving out of the suburbs into a city can change your transportation needs. Because shopping and entertainment is condensed, public transportation can be more reliable and inexpensive by comparison. If you have two cars, could you sell one? Trade a luxury car for a smaller more economical vehicle. You’ll save a lot on insurance and gas.

Assess your communications needs. Do you have a landline, cell phone, premier cable TV and Internet? Eliminate the landline and choose a cell phone package with fewer minutes. Do you really need premium cable or would fewer channels fit your viewing style? Could you get by with a slower Internet speed?

Consider a part-time job. Every little bit helps and a part-time job can help you stay active and engaged. Also, volunteer at museums, theaters and other entertainment venues. Often, volunteers are offered free tickets for cultural events and other amenities. The cost of fun just went down.

Retain an Emergency Fund

Having an emergency fund of six months’ worth of bill payments was a good idea when you were employed full time. It’s still a good idea. Setting money aside for unexpected or infrequent expenses (new water heater or roof) will eliminate the need for incurring expensive debt.

Remember, debt is the result of choosing to buy something you can’t pay for immediately. Spending wisely can help control the amount of debt you acquire and pay down the debt you already have. Navigator offers a variety of tools to help you manage your money carefully. Visit our website at www.navigatorcu.org, call 228-475-7300 or contact a service representative at your local branch to learn more.