Ep 20: Do You Need to Be Debt Free to Retire?

The Concept:

Do you believe you need to be completely debt free to retire successfully? Or are you okay carrying some balances beyond your working years? There are many opinions about the best way to handle debt and retirement planning, so we’ll tackle them all on today’s show.

Click the timestamps below to skip around to specific topics in the episode.

The Reality of the Matter:

Debt can be one of the biggest enemies to retirement planning. No matter how hard we try to save and plan, that cloud of money owed lingers over us and limits our ability to invest.

A common concern for people with more debt than they’ll be able to pay off before retirement is how much will this impact my ability to stop working? The good news is there are ways to manage debt in conjunction with your retirement strategy. This episode of the Retirement Reality Podcast is all about that dreaded ‘d’ word with a look at strategies but also client success stories.

Relocation in Retirement?

President Trump made news in late 2018 when he changed his permanent residence from New York to Florida. The move was made with tax savings in mind, and it’s something that many people consider when retirement rolls around. We’ve worked with clients to weigh their options and figure out if enough money can be saved by moving. Mike shares his experience with relocation and what considerations need to be made if you are thinking about this option.

[2:12] – In the News: President Trump changed his state of residence from New York to Florida for tax purposes. How often do our clients consider moving in retirement?

Managing Debt & Retirement Planning

Debt is challenge we all face at some point in our life. It can be a debilitating position for investing and saving, and that’s why all financial advisors will put an emphasis on paying off debt as an early step in the planning process. It’s a priority for our clients and we’ve seen a lot of success from people that stick to the process.

But everyone can’t pay off their debt before retirement arrives. That’s a reality that you might face and that’s okay as well. Retirement planning and debt management can co-exist. There’s no reason to fret, but it’s important you put a plan in place to erase the debt or at least get it to a manageable amount to fit within your budget.

Mike uses this episode to discuss the strategies we use, clients that have seen success, and why it’s a great thing if you can become debt free by retirement.

[5:01] – Our main topic today is debt heading into retirement.

[5:22] – Clients can consistently create more wealth when they don’t have debt.  

[7:30] – Do you have to be debt-free heading into retirement or is that able to be managed?

[8:55] – Does Mike believe there’s such a thing as ‘good debt’?

[10:40] – What are some examples of bad debt?

[12:04] – Car debts aren’t the best but it could make sense in certain situations.

[13:38] – How do you work with clients to develop a plan to become debt-free?

[15:42] – Mike and his wife overcame a lot of debt earlier in their life.

[17:09] – That client Mike helped was able to retire, which was great to see.

Thanks for checking out this episode of the Retirement Reality Podcast. We’ll talk to you again next week.



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