I still remember the day I realized my relationship with debt had to end. We had a long history together, credit cards, car loans, even a flirtation with a second mortgage. But as I edged closer to retirement, it hit me like a forgotten gym membership fee: I couldn’t afford to keep dragging that baggage with me into my golden years. It’s time to take a look at the evils of carrying debt, especially if you are nearing retirement age, it’s time to break up with debt.
You see, retiring with debt is like going on a long-awaited vacation and bringing along your in-laws. No offense to in-laws, of course, but it’s just not the freedom you imagined. Instead of waking up each morning with the sun streaming through the windows and deciding whether to go fishing or have pancakes, you’re stuck deciding whether to pay the utility bill or the minimum on that darn credit card.
So let me walk you through why I kicked debt to the curb before I retired, and how you can too, without sacrificing everything that makes retirement sweet. Get a retirement planning checklist to help save even more.
First of all, debt steals your peace of mind. I didn’t fully appreciate this until I sat down one evening to do some “fun” budgeting (because that’s how you know you’ve officially entered retirement prep mode—budgeting becomes a hobby). As I looked at my monthly obligations—mortgage, car loan, credit card minimums—I realized that more than 30% of my retirement income would go straight to debt service. That’s money that could have funded travel, hobbies, spoiling the grandkids, or just saving for a rainy day. Instead, it was heading out the door faster than my neighbor’s cat when I start my lawn mower.
The stress of debt doesn’t retire just because you do. In fact, it gets heavier. When you’re still working, there’s a paycheck every two weeks to bail you out. But in retirement, you’re usually on a fixed income—Social Security, a pension if you’re lucky, maybe some investment withdrawals. That money doesn’t replenish like it used to. Every dollar counts more, and wasting them on interest payments just doesn’t sit right.
One of the best decisions I made in the five years before I retired was to attack my debt like it was an overgrown patch of weeds threatening my backyard barbecue. I started with the small stuff—credit cards with those 18% interest rates that were gobbling up my money like a Labrador at a cookout. I cut them up (the cards, not the dog), paid them down, and closed the accounts. The relief I felt was instant. It’s amazing how a lower balance can do more for your blood pressure than any medication.
Then I turned my sights on the car loan. That car was nice, but I didn’t need a flashy ride to impress anyone. My daily commute was about to be a walk to the mailbox. So I traded it in for a gently used sedan with great gas mileage and zero payments. I even named it “Freedom.” Best relationship I’ve ever had.
Now, the big one—the mortgage. Let me be honest: paying off the house wasn’t easy. It meant tightening the budget, cutting back on some extras, and funneling every spare penny into that loan. But the day I made my final payment was one of the proudest moments of my life. I popped a bottle of something bubbly (okay, it was sparkling water, but still), danced a little jig in the living room, and slept better that night than I had in years.
I know not everyone can or wants to pay off their mortgage before retiring. Some financial experts even argue that mortgage debt isn’t as bad since rates are relatively low. But let me tell you, walking into retirement without a mortgage felt like being handed a get-out-of-jail-free card. My monthly expenses dropped significantly, and suddenly my fixed income didn’t feel so fixed anymore. It felt flexible. It felt like freedom. The kind of freedom that is very hard to duplicate.
Another benefit of cutting out debt is the psychological lift. I used to lie awake worrying about “what if” scenarios. What if I needed a new roof? What if inflation gobbled up my grocery budget? What if one of my kids needed help? Now, with no debt obligations weighing me down, I’ve got more room to handle life’s curveballs. And they still come, believe me, but I’m better equipped.
Let me get into some practical tips, because if you’re like me, you don’t want just a pep talk—you want a plan. Start by making a list of every debt you owe. Yes, it’s scary. I needed a stiff cup of coffee and a support dog by my side. But knowing where you stand is half the battle. Then pick a method—either the avalanche method (tackle the highest interest rate first) or the snowball method (start with the smallest balance to get momentum). I went with snowball because I like small wins. It’s petty, but satisfying.
Next, look for ways to free up cash. I found I was paying for five streaming services but only watching one. I also ditched the landline (who was I kidding, no one under 80 was calling it except sales associates), started cooking more at home, and reviewed my insurance policies to make sure I wasn’t overpaying. Every dollar I found went toward my debt. I even sold some unused stuff on eBay. Everybody has something to sell, right? Even if it’s painful to finally unload those old vinyl records you collected as a kid.
If you’re already retired, it’s not too late. You can still make great strides. It might mean downsizing to a smaller home, moving to a lower-cost-of-living area, or refinancing into a better loan if you still carry a mortgage. Just be careful not to use retirement savings too quickly to pay down debt—always talk to a trusted financial advisor first. You want to strike the right balance.
Now, let me say this – life happens. I’m not here to shame anyone for having debt. I’ve been there. Sometimes medical expenses, caregiving responsibilities, or just plain bad luck can derail your plans. But the key is to make a plan and do what you can. Progress is progress. Celebrate the small victories. And don’t be afraid to ask for help from a financial counselor or nonprofit credit advisor if you need it.
Since kicking my debt to the curb, my days are lighter. My budget breathes easier. And I feel more in control of my future. I still have to be careful, of course. Retirement isn’t a free-for-all. But at least I’m not dragging a ball and chain of monthly payments behind me. Now, the only interest I’m paying is when I look at a new hobby or take a peek at the next travel deal.
So if you’re staring down retirement and still carrying debt, I encourage you to get serious about breaking up with it. You’ll feel better, sleep better, and you just might find that retirement becomes everything it’s supposed to be—relaxing, fulfilling, and most of all, yours to enjoy on your own terms.
And as I like to say, being debt-free in retirement isn’t just a financial decision, it’s a lifestyle upgrade. One I highly recommend. Freedom from debt is pretty awesome.
Sources for further reading:
- Consumer Financial Protection Bureau. “Managing Debt in Retirement.” https://www.consumerfinance.gov
- National Council on Aging. “Debt and Older Adults.” https://www.ncoa.org
- AARP. “How to Reduce Debt Before Retirement.” https://www.aarp.org
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Happy retirement planning!