Things to Pay Off Before You Retire
Between housing payments, utility bills, groceries and extra curricular expenses, making a monthly budget with a full-time job can be challenging enough. Facing retirement can be even more daunting with the prospect of meeting all your financial obligations without that full-time job. However, if you plan in advance, you can significantly diminish the number of financial obligations you must meet. The following are three major expense areas that, in retirement, can severely deplete your savings and diminish expendable income from other sources such as your retirement investment income.
Top Three Things to Pay Off Before You Retire:
The average American family devotes 30-40% of income to housing costs. If possible, pay off your mortgage before you retire. Look at your payment schedule and make extra payments, or overpayments, when you can. If you can’t pay off your entire mortgage, pay down the interest so you’re paying on principal to reduce the amount you pay each month. Don’t forget about home repair costs, either. Major home repairs, such as water heaters, plumbing and siding, can cost thousands of dollars. Plan ahead at least five to 10 years, repairing or replacing items that may need attention within that time-frame while you still have income from your full-time job to cover them.
Cars are expensive to buy, but even more expensive to maintain. If you need a new vehicle, make sure to purchase before you retire so you have stable income to pay off the higher taxes, license fees and insurance that new cars incur. If you want to keep an older car, take it to an auto shop and have a full diagnostic done. If there are any expensive repairs that need doing, make a list and see if you can’t have them attended to before you retire. Remember, set aside an account or some of your retirement income each month to attend to vehicle maintenance, taxes and insurance.
Probably the least expected item on this list, childcare can be expensive past the days of nursery school and day care. Especially in these difficult economic times, parents are prone to take care of adult children long after college tuition has been paid. If you had children later in life, you may see college tuition around the time you expect to retire. Keep these expenses in mind- just because the kids are over 18 doesn’t necessarily mean they get any cheaper.
A self-directed IRA may help increase your retirement income. Discover how a SDIRA can fit into your retirement investing plans and possibly allay some of these financial obligations that won’t disappear just because you’re enjoying your retirement, call us today at 855-604-7526.