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Should you be concerned about your debts in your retirement? The short answer is yes.
If possible, it’s best to avoid carrying debt in retirement. Studies have linked credit card debt with increased stress and even physical pain. Meanwhile, older adults without such burdens find it far easier to manage their finances and make ends meet.
According to the Federal Reserve Bank of New York, from 1999 to 2019, debt among Americans over the age of 70 climbed a whopping 543%. A 2021 report by Experian found that the average credit card debt held by baby boomers was $6,230, while the average credit card debt held by the Silent Generation (now ages 76 and up) was $3,821.
Households of people ages 70-plus are more likely than before to have credit card debt, mortgages and even student loans.
To make debt payments more manageable, create a budget. List all your essential and non-essential expenses, and don’t forget to include your debt payments in the essential category. Compare that list against your monthly income. If you’re not bringing in enough to cover your necessities, cut back. You know what to do: pare your television subscriptions, borrow books and DVDs from the library, cook at home and so on. Automate your bill paying so you don’t forget and get hit with late fees.
It can be helpful to track your expenses, to see where your money really goes. If you account for every penny, it’ll be easier for you to see where to trim the fat in your spending. You can use an app, a spreadsheet or simple ledger. If credit card debt is a problem, shop with cash instead. You don’t want to get stuck paying high interest rates that compound when you can’t pay off your balance each month.`And avoid shopping altogether when possible: Buy Nothing communities on Facebook can be a great way to acquire what you need at no cost.
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