5 Actual Mistakes Retirees Need to Avoid
1.
Not Understanding the Role of Debt in Retirement
COUPLE A: They’ve saved $2 million for retirement. Sounds great, right? They’ve hit that magic number their advisor told them to aim for. But here’s the catch—they still have a mortgage, car loans, credit card debt, and maybe even a few payments left on that Disney Vacation Club membership they splurged on years ago. More than half of their yearly income is going to pay off these debts, and every time the market dips, they’re stressed about whether they can still meet their payments. Their retirement savings are essentially being drained to keep up with debt payments.
COUPLE B: They’ve saved $500,000 for retirement. Not nearly as flashy as Couple A’s $2 million. However, Couple B has something that Couple A doesn’t—zero debt. Their house is paid off, their cars are paid off, and they don’t owe a dime. They’re living comfortably on Social Security and a small pension, and because they’re not tied to debt, they can enjoy life without the constant worry of how market fluctuations will affect them. Even if the market takes a hit, they’re largely unaffected because they’re not paying off loans.
We all know the common refrain: “You need $1 million to retire!” or “What’s your retirement number?” But here’s the thing—what most people (and commercials) don’t tell you is that it’s not just about what you save; it’s about what you owe.
monthly payments—you’re also more exposed to unexpected events, like a market downturn or sudden health expenses. Let’s take a closer look at how debt can affect your retirement:
Why does debt matter so much in retirement? Here’s the simple truth: less debt equals more flexibility and security. When you have debt hanging over your head, it’s not just about the
So, who’s better off? Couple B, hands down. Less debt means less stress, more control over your finances, and a lot more peace of mind. Debt can silently erode your financial security in retirement—don’t overlook its impact.
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