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Essentially, no more costs that will eat into your retirement savings.
According to a2023 Experian report, the average individual consumer owes $104,215 in debt.
Paying off debt is often easier said than done.
But the good news is you dont have to wait until retirement to become debt-free.
In fact, there are certain debts you should make a run at pay off well beforehand.
Think of it as debt repayment triage.
Doing so can alleviate financial stress and free upsome extra cashin your retirement accounts.
As you embark onyour debt repayment journey, you should check out what he has to say.
I think its critical to pay off your mortgage before retirement, continued McNabb.
Ive always believed in the peace of mind that comes with owning your home outright.
He even remembers the day he made his final mortgage payment in 2023.
It was such a liberating experience, said McNabb.
Many other financial experts also suggest getting rid of that mortgage payment before retiring.
InDave Ramseys 7 Baby Stepsmoney management plan, step six entails paying off your mortgage early.
Debt will destroy your plans to retire early, Ramsey wrote.
It will eat up your monthly income and drain your retirement savings.
As of July 2024, the average mortgage rate on a30-year, fixed-rate loanwas 6.77%.
The average home sales price in the U.S. is $520,000 (also for July 2024).
Auto Loans
Auto loans are another of those debts that can come with a high interest rate.
The average rate on a used vehicle was 11.17% during that same time.
If youre still dealing with a car loan, definitely prioritize paying that off.
You could end up saving thousands in interest.
As McNabb explained, I found it really beneficial to go into retirement without owing anything on my vehicles.
Its nice not having to worry about car payments when your income is fixed.
Plus, its hard to put a price on peace of mind.
Credit Cards
Last but not least, McNabb suggested paying off any credit cards before retirement.
Thats nearly double what it was a decade ago.
Ive seen how high interest rates can eat into your savings, said McNabb.
I made it a point to pay off my credit card debt as quickly as possible.
Even before my retirement.
Check with your state government or nonprofit organizations to see whats available.
Caitlyn Moorheadcontributed to the reporting for this article.
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