How Debt Can Affect Your Retirement Asset Strategy

Many Americans are approaching their golden years with some level of debt. In 2016, nearly 61% of US citizens were transitioning into retirement while still bearing debt.[1] While one might assume that expenses would naturally decrease after retiring, that isn’t always the case.[1] Sometimes, your costs will remain constant, decrease, or they may rise. It varies from situation to situation, and it’s impossible to accurately predict your monthly expenditures during retirement. You can make an educated guess based on your current lifestyle and budget, but there isn’t any exact calculation that assures complete financial predictability throughout retirement life. Therefore, considering a strategy to reduce your debt might be beneficial when you are establishing plans for retirement.

Credit Card Debt Can Stack Up

For starters, keep tabs on your credit card debt. Credit cards are notorious for their steep interest rates, so if you’re burdened with substantial credit card debt, it could help to reduce it, especially on a fixed income. Although each circumstance varies, a significant amount of credit card debt can potentially lead to long-term financial troubles. It might also be worth repaying student loans and assessing your mortgage situation for similar reasons.[1]

With the Right Strategy, Retirement Funds Can Help Address Debt

An alternative approach might be to address your debts using a portion of your retirement savings. However, it’s important to note that this method is complex and requires you to understand the tradeoffs of paying off debt in the short term with funds that are meant for your long-term retirement. The complexity does not necessarily mean you shouldn’t explore it; it merely means that determining which choice serves you best can be challenging, given that the wrong move for you could be financially costly.[1]

You may also consider your Social Security claiming strategy and timeline as a factor in helping you reduce or eliminate your debt in retirement. The extra income could be the added boost you need to get your debt level trending down and potentially eliminate it.

Regardless of your specific circumstances, vigilance over your debt is crucial as you near retirement. The strategies you employ to deal with your debt should be comprehensively tied into your overall retirement plan.

Handling your personal finances in retirement is not always easy. If you’re seeking advice on optimally managing your personal financial affairs, don’t hesitate to contact our experts for a no-charge assessment of your circumstances.



Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.

Content regarding social security is not associated with or endorsed by the Social Security Administration or any other government agency.

Maximizing your Social Security Benefits assumes foreknowledge of your date of death.  If as an example you wait to claim a higher monthly benefit amount but predecease your average life expectancy, it would have been better to claim your benefits at an earlier age with reduced benefits.

Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated.

This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.

Advisory services offered through Asset Strategy Advisors, LLC (ASA). Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Insurance offered through Asset Strategy Financial Group, Inc. (ASFG). ASFG and ASA are independent of CIS.


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