Many households have debt in retirement, raising concern about the financial freedom of older adults. However, managing debt can be really challenging especially when you've retired.
The fact is, when you retire, your earnings drops and your medical expenses increases because you're getting old. Only few older Nigerians have assets that can come in handy for dealing with debt and often a wider range of lifestyle options to leverage after retirement.
However, don't get me wrong, debt in retirement isn't always bad. Almost all households will have a retired person with debt. Even Americans currently have low-interest-rate mortgages, including those who bought a home or refinanced before their Federal Reserve began hiking rates in 2022.
What I'm saying in essence is that, even though you're dealing with debt in retirement, you don't have to rush or get frustrated to pay these off. In this article, we will walk you through four tips best for dealing with debt in retirement.
Get a side Job
The traditional retirement model in Nigeria; 35 years of service or mandatory retirement age at 60 years, may not be the most appropriate approach anymore.
Supplementing retirement savings and social security benefits with part-time jobs can helps grow your money continually, which will also helps you in dealing with debt in retirement.
Not even nowadays that naira is devaluing everyday. In essence, you need to get a side hustle after retirement or save enough money while still working to setup a profitable business for yourself after service.
Deal with High-interest Debt first
If you're owing banks or loan apps and you're willing to use any available funds to clear the debts, I'd suggest to pay off these debts starting with the highest-interest-rate debts and working your way down until it’s all paid off.
I can say this is the smartest approach towards high interest loans repayment. It'll definitely stop the debt's high interest rate from accumulating.
Downsize Yourself
This approach is very important if you wish to deal with debt in retirement fast. Like I said earlier, when you retires, your earnings reduces. Hence, you have to make some adjustments to your spendings or lavish lifestyle.
If you're dealing with mortgage debt, you can downsize or relocate to more affordable house. This will definitely let you have leftover money to Carter for other stuffs.
Lookout for Government Benefits or Grants
In Nigeria, Federal Benefits don't always get to the poor. Notwithstanding, it also helps in dealing with debt in retirement. Imagine you're qualified for the government grants, including programs that help you pay for food, transportation or even housing, how much would that help?