You probably have some kind of debt; most of us do. Maybe it is necessary (i.e., a mortgage or a car loan). Some may come from everyday or discretionary spending, like department store cards or other credit card debt. And, if you have more credit card debt than you’d like, you’re not alone. According to a 2021 report by NerdWallet, the average U.S. household with credit card debt carries an estimated $6,006 in revolving credit card balances. This is down from previous years, but it is still a significant amount of money.
46 percent of Americans expect to retire with debt. This includes younger generations who may carry debt into retirement. Since repaying debt on a fixed income can pose extra challenges, it’s never too early to think about how today’s spending can affect tomorrow’s dreams and financial well-being.
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:
- 26 percent of current retirees retired at 66 or older
- 47 percent of workers 55 and older expect to retire at 66 or older, or never retire
- 58 percent of workers surveyed said that debt is a problem for them
Lack of confidence in financial security is one reason people plan to retire later.
You don’t have to let these statistics get you down. Instead let them inspire you. Start working today to pay down your high-interest debt and increase your chances for retiring at your preferred age.
What can you do now that could help you retire in the future?
You can take action to get yourself on the path to paying down debt sooner and adding to retirement savings.
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 set regular 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. Even though average credit card balances have dipped in the past year or so, collectively Americans still carry high-interest debt that can challenge long-term financial goals.
How much can debt consolidation help?
If you are specifically looking to reduce interest rates from credit card debt, here are three reasons why using a personal loan to consolidate debts is a smart idea:
- Rates on a personal loan can be lower than the interest on revolving debt, so you can pay less on interest. That’s savings you can put toward your retirement fund.
- You can lock in a fixed rate so that your monthly payment won’t change, while other interest rates may be on the rise.
- Instead of managing multiple bills, you can plan your budget around having one set regular 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 long-term goals.
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 it’s never too late to take steps in the right direction.
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.
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