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Benefits of Debt Consolidation

How to Pay off Debt and Save for Retirement

Retired couple on a motorcycle trip enjoying their retirement savings

You probably have some kind of debt. Some of it may be necessary (i.e., a mortgage or a car loan). Other forms of debt, like department store cards or other credit card debt with higher interest rates, may be less than ideal. And, if you have more credit card debt than you’d like, you’re not alone. According to a December 2018 report by NerdWallet, the average U.S. household with credit card debt carries an estimated $6,929 in revolving balances.

A recent report suggests that more of us are carrying debt into retirement than ever before, including younger generations who could be carrying all the way from their early career into retirement.

Will you ever retire?

While some may plan on retiring at 65, others at 55 and maybe some even dream of bowing out at 40, an Employee Benefit Research Institute study suggests dwindling confidence in the possibility of early retirement:

  • Twenty-six percent of current retirees retired at 66 or older
  • Forty-seven percent of workers 55 and older expect to retire at 66 or older, or never retire
  • Fifty-eight percent of workers surveyed said that debt is a problem for them

What you can do now that could help you retire in the future

Lack of confidence in financial security is one reason people plan to retire later. But, don’t let these statistics get you down. You can work to pay down your debt today and increase your chances for retiring at your preferred age.

So how can you take action somewhat quickly to get yourself on the path to paying down debt?

Man And Woman Planning To Consolidate Debt

Debt consolidation is one strategy for lightening your load and paying off debt. Debt consolidation means that your various debts, such as credit card bills or loan payments, are rolled into one monthly payment.

This may be especially useful for people with excessive debt from credit card bills. When planning your retirement, it’s a smart idea to take control of this debt. According to Experian, Americans’ average credit card debt jumped 3% from 2018 to 2019 – from $6,040 to $6,194.

How much can debt consolidation help?

If you are specifically looking to reduce interest rates from credit card debt, here’s three reasons why using a personal loan to consolidate debts is a smart idea:

  1. Rates on a personal loan can be lower than the interest on revolving debt, so you can spend less on interest.
  2. You can lock in a fixed rate so that your monthly payment won’t change, while other interest rates may be on the rise.
  3. Instead of managing multiple bills, you can plan your budget around having one fixed monthly payment when consolidating those debts.

Discover’s debt consolidation calculator can estimate savings on interest, as well as payoff time, to show you the value of a debt consolidation strategy.

Planning for the future

When it comes to retirement, there are many sources you can consult. The important thing is to keep an eye on your financial future.

Not everyone can have a perfect financial picture at any given moment — with a budget that allocates exactly what you need for bills, retirement, debt reduction and emergencies — but taking steps in the right direction is a great place to start.

Whether that’s simply saving money on a daily basis, planning for the long haul, or lowering interest payments on debt, you’re stacking the building blocks in your favor towards the next phase of your financial life.

Ready to check your rate and manage your debt? Get Started