Ready to retire but debt holding you back?
Image Source: Flickr User Pug50
Financial stress is a challenge at any stage of your life but in your retirement years, when you’re on a fixed income and looking forward to your golden years, is one of the worst times. When most people think about their post-retirement plan, it’s about spending time with family, relaxation, travel, and doing all the things you never had time for while you were busy working. But when you’re stuck with a pile of debt, you might not have the luxury. Here’s what you should know and how bankruptcy can help.
#1 Most Households Have Debt
In decades past, consumers heading for retirement paid off debt. They would make the final payments on their mortgage, so they owned their home free and clear, and once they were done with their career, there was less income but also much less debt. In contrast, now the vast majority of households led by adults over age 55 now carry debt into retirement. In fact, some have so much debt that they might retire from their career but have to keep working.
#2 Fewer People Than Ever Have Pensions
Something else that has changed over the years is that most companies no longer offer pensions to employees. A pension was once something that inspired loyalty and encouraged employees to spend the bulk of their careers with one company – 20, 25 or even 30 years. Outside of government jobs, few careers come with a pension these days. Instead, it’s a 401(k), but if you don’t save, you don’t have retirement there to cushion your transition to retirement. With debt in play, this can be more of a challenge.
#3 Savings Are Not Enough for Retirement
More than a quarter of all seniors over age 60 have neither a pension or retirement savings as a backup when heading into their golden years. If you’ve been saving all along and setting money aside into your 401(k), you might be okay. However, if you don’t start saving until later in life or have no savings at all, it can be problematic. If you add debt onto this dilemma, you can see that things can quickly become worrisome and unmanageable.
#4 Seniors Are Helping Family with Debt
One of the reasons many seniors are struggling more with debt is because their children and children’s children are struggling. Increasingly, older American might take on parental student loans to put their kids through college (or even their grandkids). And when kids or grandkids need a helping hand, it might be them that help out. Of course, you want to help out family, but that can mean racking up credit card debt, taking out a second mortgage, and not being able to prepare for retirement.
#5 Bankruptcy Can Help
If you’re looking ahead at retirement – or cutting back on work – as you get older and want a break, debt can be a significant obstacle to your goals. If you’ve got a mountain of credit card debt, medical bills, a second mortgage, not a lot of equity in your home, and know you can’t service your debt, bankruptcy may help. If you can get a fresh financial start by shedding much of your debt, you might be able to get by on a lower income that comes with retirement.
How Will Bankruptcy Impact Your Golden Years?
It’s true that bankruptcy can affect your credit score, but unless you’re planning on taking out a new mortgage or buying a new car, you can wait and let your credit bounce back. A certain amount of assets can be protected using North Carolina bankruptcy exemptions, including up to $35k in home equity for individual filers or $70k if you file bankruptcy as a couple. Some cash in the bank can be protected and a reasonable amount of equity in your vehicle.
If you don’t have much in the way of assets but are overwhelmed with debt, bankruptcy might help you get a financial reset to make your golden years much brighter. To find out more about the benefits of North Carolina bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 now for a free NC bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.