Baby boomers appear to be in a unique situation. Despite having comparatively decent credit scores, they are heavily indebted. Take a thorough look at your finances as soon as possible if you find yourself in this scenario and are approaching retirement. Fortunately, reducing debt may not be as difficult as you think.
Where Things Stand
According to Transamerica Center for Retirement Studies data, more over 30% of baby boomers believe the COVID-19 situation has diminished their trust in their ability to retire comfortably. It is safe to conclude that their unpaid debt is at least partially to blame for this. Take into account these Experian statistics.
- Baby boomers have the second-highest average credit card debt of any age group at nearly $6,700.
- Nearly $26,000 is the average amount of their non-mortgage debt.
- Their typical mortgage debt is more than $190,000.
- Of all boomers, 2.2 percent are behind on at least one debt by 30 to 59 days, 1.2 percent are behind by 60 to 89 days, and 3.2 percent are behind by 90 to 180 days.
It’s common for baby boomers to feel pressure to pay off their debts before they retire, which is amplified if they have meager salaries or rely on social assistance. The good news is that you can correct the situation by yourself.
How Can Boomers Pay Off Debt More Quickly?
Debt can be rather simple to accrue and equally challenging to pay off, particularly if expenditure exceeds income. Put a stop to wasteful spending as soon as possible if you find yourself in a scenario like this.
Pay off your mortgage in full
If you have a mortgage, it’s likely your largest debt, so it makes sense to pay it off as soon as you can. By the time you retire, ideally, you won’t have to make any more mortgage payments. By raising your monthly repayment, you can hasten the process. You might gain from refinancing given the current low interest rate circumstances. For some baby boomers, downsizing to ease financial strain also works effectively.
Reduce debt from credit cards
There’s a considerable probability that you’ll get several offers for preapproved credit cards if your credit is good. Avoid utilizing them at all costs because doing so will increase your debt. Don’t spend your credit or debit cards on stuff you don’t actually need. If your adult children have separate cards that are linked to your main cards, you might want to get rid of them. If you currently have high interest credit cards, using 0% APR balance transfer deals may be advantageous.
Pay your credit cards before other debts like personal and auto loans because they frequently have high interest rates. Even baby boomers who are having problems making their current credit card payments might benefit from considering debt settlement.
Lower your medical debt
According to data made public by Lending Tree, while close to 50% of baby boomers have at some point been in debt due to medical expenses, only 23% are doing so right now. Due to the fact that medical costs tend to rise as people get older, boomers in particular need to pay attention to this issue. Additionally, modifications to health insurance rules may have an impact on the amount of out-of-pocket costs you incur.
Make sure to thoroughly compare your options for health insurance, and set up a separate fund just for medical costs. If you already owe money on medical bills, speak with your doctor and explain your predicament. Then, ask for a discount or try to work out a payment plan.
Conclusion
You may speed up the process of paying off debt by sticking to a clearly defined plan, whether you’re paying off credit card debt, a mortgage, a personal loan, medical debt, or tax debt. This entails keeping an eye on your spending and paying off the loans with the highest interest rates first. It is best to speak with a lawyer as soon as possible if you feel you need assistance with debt settlement or believe bankruptcy may be in the horizon.