Retirement is generally a distant blot on the horizon for most people, but unfortunately it turns into a dark cloud looming large soon enough. You can ensure that this cloud isn't dark enough by clearing up the maximum amount of your debt before you step into the golden years of your life. This is because debt is the reason most Americans are unable to save enough for their retirements. You should try and be debt free as soon as possible.
Following are 5 types of debt that are specifically insidious according to financial planners. Be sure to eradicate them, if you're interested in enjoying your retirement years.
- Unsecured consumer debt: Unsecured consumer debt of Americans run into billions of dollars. Car loans, credit cards and other such debt should be taken care of before retirement itself. This is why you should make it a point to scale down your life, so that you can save more and pay off these debts easily. If you manage to live beneath your means, then you're more likely to save and get rid of these debts.
- Real estate debt: If you're under the impression that you can partially offset the mortgage for your home during retirement only because of a tax deduction, then it's time for you to think again. This is because a number of other factors should come into play by then and expected break on the mortgage would be wiped off in a jiffy. Hence, it's advisable that you take care of mortgage debt beforehand.
- Your own 401(k) debt: Quite often people don't realize that borrowing from one's own 401(k) can boomerang. Make sure you're not one of them. Even if you've borrowed from your own 401(k) savings, be sure to return the entire amount while you still have your job. This fund is for your retirement years, so stay away from it until then.
- Student loan debt: Student loan debt can go on for ages and you might as well tackle it before it's too late. What might seem as inconsequential student stuff now, can actually take mammoth proportions in the near future. However, don't just opt for any loan consolidation service.
- Adult child's debt: This is the biggest mistake you could make. Even if you consider it as an investment, make sure you don't do it. You should not be straddled to your adult child's debt in any form whatsoever. And in case you are, then teach him or her to take his or her own responsibilities, especially financial ones. You can't do it for them forever.
The economic downturn has affected the nation quite a bit and even after years gone by, financial issues exist. This is why you shouldn't take chances about your future. Do get rid of the above debts and you'll lead a happy life soon enough.
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