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As you plan for the golden years of retirement, it’s important to take a step back and examine the route we’ve plotted to get there.
Suze Orman, a beacon of financial wisdom, offered some critical advice for baby boomers navigating the choppy waters of retirement planning in a blog post on her website.
Here’s a look at her insights into where many boomers are going astray and her advice for getting your finances back on course.
The Debt Trap
One of the most alarming trends Orman has noticed is the significant debt load carried by individuals as they approach retirement.
Her stance is clear: entering retirement in debt is a pitfall you should avoid at all costs. The key to a secure retirement is to be free from debt.
Why? With retirement comes a fixed income and the last thing you need is a chunk of that income going towards debt repayments. Moreover, the psychological relief of being debt-free can significantly reduce stress levels, allowing you to truly enjoy your retirement years.
Separating Needs from Wants
So, how does one break free from debt? Orman challenges you to take a hard look at your current expenses, and she suggests using tools like expense tracking apps to identify areas where spending can be cut.
The goal is to differentiate between what you absolutely need and what you can live without. Orman bets that you can find at least $250 a month in unnecessary expenses that could be redirected toward paying off your debt. And that’s just the start.
The Mortgage Question
For many, the dream of retiring doesn’t involve leaving the family home, but Orman suggests rethinking that, especially if you have a mortgage.
If you plan to stay in your current home post-retirement, she advises making it a priority to pay off your mortgage by the time you retire. If you’re contributing more to your 401(k) than needed to get the maximum match, consider scaling back to free up funds for your mortgage.
But here’s the kicker: only pursue this path if you can truly afford to stay in your home. Orman emphasizes the importance of being realistic about the ongoing costs associated with homeownership, such as insurance, property taxes and maintenance.
If these expenses will stretch your retirement budget too thin, it may be time to consider downsizing or relocating to a more affordable setting.
The Bottom Line
Retirement should be a time of peace, relaxation and freedom. To achieve this, Orman urges baby boomers to tackle their debt head-on, live within their means and make strategic decisions about their living situation.
By taking these steps, you can secure a financial foundation that supports a retirement filled with joy and devoid of financial stress.
Editor’s note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates’ editorial team.
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