Tips for Managing Debt in Retirement: 5 Steps for Low-Income Retirees

In 2024, adults aged 65-74 carry an average of $134,950 in debt. With the many changes and challenges that accompany this major transition, debt can be one more hurdle between you and a relaxing and comfortable retirement. We have compiled five practical tips to help you manage your debt during retirement. Let’s walk through these steps together.

1. Consolidate Debt or Refinance for Lower Interest Rate

At first glance, taking a look at your debt may seem overwhelming. Maybe your debts are scattered across many different areas of your life or maybe it’s just a mortgage. Either way, consider consolidating your debt or refinancing to aim toward a lower interest rate. An advantage to consolidation is sometimes lowering monthly payments to help with monthly management in addition to potentially lowering interest rates. This is a great option to consider as a first step to manage debt in retirement.

2. Review Your Credit

Another tactic to consider to manage debt in retirement is to review your credit report. It can be helpful to take a look at your credit report and see your debts and interest rates outlined. This provides a solid foundation for understanding your current position and identifying potential areas to address. For more information on how to tackle debt after checking your credit, check out this article: Retire Without Credit Card Debt! 4 Repayment Strategies to Consider

3. Stop Adding More Debt

Finding ways to avoid accumulating additional debt is essential for making financial progress. While this seems like a simple concept, it can be harder to execute than it may seem. With groceries, gas and bills eating up a big portion of Americans’ incomes, finding ways to cover all of these costs without debt can certainly be a challenge.

Using a working budget and sticking to it can help you reduce the amount of debt used each month. Consider writing out expenses before each month begins and plan for ways to cover these costs with the income you bring in. Some even go as far as removing the credit card as a payment option in their home.

Here is an article that outlines some of the steps to create a working budget: How to Create a Monthly Budget That Works

4. Consider a Side Hustle

Once you create a budget, you may find that despite getting everything on paper, your numbers still don’t add up without using credit or debt. Depending on your goals, a side hustle or part-time job can prove useful in managing debt. Whether you are working to pay off your remaining debts or simply trying to create a little extra income for medical bills, grocery bills or utilities, a side job creates a little more room in your budget.

5. Seek Inspiration from Out-of-Debt Success Stories

Once you have a full understanding of your debt landscape, have a budget and have considered increasing your income, reducing your debt may start to sound nice, but daunting. Sometimes a little motivation can be helpful when plotting out a debt payment journey. It can seem like a very long road and could even seem impossible to tackle. Consider looking for videos, social posts or articles about families, like yours, that have carved a successful, steady and realistic path out of debt. Finding similar stories that are realistic could be comforting, supportive and even a little inspiring to your own efforts.

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