Start My Answer
loading...

How to Get Out of Debt Before Retirement

James Miller | October 19, 2022

Enjoy a debt-free retirement. Here's how.

Summary: Are you trying to retire without any debt? Here iss SoloSuit's guide on 4 steps to follow to enjoy a debt-free retirement.

There are three things in life you can't get away from: taxes, death, and student loans. While secretly hoping the next celebrity showing up at your graduation might cover for the third, we're here to encourage you that there's still life to look forward to in the years ahead in case that celebrity doesn't show.

More importantly, the last thing you want is to be stuck in the limbo of paying off debt versus saving up for retirement. This is why there are still feasible ways to make sure you can get out of debt before you finally decide to take on retirement—be it an early one or not.

What's a 401k?

401(k) is a private retirement fund for qualified employees as worked on collectively through shared profits. It is a safer retirement investment since it is protected by the Employee Retirement Income Security Act (ERISA) from employer-related issues such as litigation against an employer or bankruptcy. The only catch is that it isn't fully free from government takeovers.

The government takeover of 401k is dependent on two important factors: how the retirement fund was paid (through Roth accounts or traditionally), and if the retirement fund was claimed earlier than its maturity date (aka early withdrawal penalties).

If you fail to pay your taxes, have been convicted of a federal crime, or have overlooked paying child support or alimony, there are instances where the government can take from your retirement fund. You should avoid these three things in order to secure your 401k.

How do you balance paying off debt and saving for retirement??

You're finally working and earning your salary–that is a huge milestone! But also, this is just a short way of saying, “Welcome to the limbo of not knowing how much debt to pay off versus how much to secure as retirement savings.”

We've been there, and it can be pretty overwhelming. As you work to make ends meet, you are also trying to ensure that there's a point in life where you won't have to be in this state anymore. That's why we're here to help.

Here are 4 ways to ensure that you retire debt-free.

1. Have good credit standing

You'll know you can retire peacefully if you fully pay off your credit card. The best place to start paying off your credit card is to stop using it. Unless an emergency requires you to use it, don't. Practice living off the cash you have instead of the credit limit given to you.

That said, be more mindful about how much and where you use your card. With the current 20% interest rate, you will want to reconsider using your card for purchases beyond the cash you have in your pocket.

That way, you can start paying it off without adding any to the current bill. Additionally, purchases that offer a 0% interest won't feel tempting anymore, once you've developed the habit of living off of the cash that you're actually earning.

2. Go over your student loan

Being able to fully pay off your student loan and clearing your name (and your co-signer's name) is usually one of the most important benchmarks to gauge that you are financially ready to retire. But how do you go about this?

One baby step you can take is first to check just how much your current payables are and your exact terms for paying them.

The National Student Loan Data System (NSLDS) website can give you access to your data, given that you also have a Federal Student Aid identification. In case your loan is from a private organization, you can still have access to your information through your credit report.

An extra tip about paying off your student loan is to do so only when you're scheduled to do so. This is because, unlike a mortgage, your student loans have interests that are not necessarily taxable.

3. Pay off your car loan

Oftentimes the little things end up making the biggest difference. This is the same with car loans with relatively lower interest than a mortgage, an outstanding credit bill, or a student loan.

A better way to look at it is to realize that car loans are usually the easiest loan to start paying off. Another would be to do a quick lifestyle check: you might not need to own two cars. Selling one of your cars not only helps you to save up on car insurance, but it can also help you pay off the other car.

A morsel of wisdom that will help keep your hope is that there's a higher chance you'll be replacing your car by the time you retire, and you'll need a good amount of savings to get that upgrade someday.

4. Pay off your mortgage early

Nothing feels more like home than a mortgage-free home.

Retirement is your season for rest, relaxation, and recreation, and whether you're planning to spend that traveling the world or cozying around, your home will definitely be a place you'll most likely still spend most of it. This is why it is crucial to pay off your mortgage before you hit the sack.

As much as tapping into your 401k might seem very tempting to use it to pay this one-off, that might not be the smartest move. Keeping your retirement fund intact means it can still grow to a higher return instead of deducting from it and also paying an early withdrawal penalty fee.

You have three options to approach this touchy topic:

  • You can start clearing off more than the usual amount by sending extra to your lender.
  • You can use your extra money to invest in either a gold IRA, investments with bigger dividends, or bond investments.
  • You can sell your house and purchase a smaller one with a smaller mortgage that you can actually afford to pay off faster.

Paying off your mortgage before retirement will make those restful years at home feel even more peaceful.

Summary

There's work to do now for a more relaxed future ahead. The key is to be able to achieve that balance between working hard to save up for retirement, but also being able to live and breathe in the present. A good lifestyle check, every now and then, will prove to be useful. And in case of any unfortunate life events involving your debt repayment such as debt collection lawsuits, use SoloSuit to respond in just 15 minutes.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

Get Started

We have answers.
Join our community of over 40,000 people.

You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.

Ask a Question.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Debt collector guides

Are you being contacted by a debt collector? We’re making guides on how to resolve debt with each one.

Arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Bankruptcy

Bankruptcy is a great way to legally resolve debt, but it's usually best to consider it as a last resort. Here are some bankruptcy guides to help you decide which debt resolution option is best for you.

Check your case status

Don’t have time to go to your local courthouse to check the status of your case? We’ve created state guides on how to check the status of your case throughout the US, complete with online search tools and court directories.

Credit

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt, along with other credit-related resources.

Debt collection FAQs

Find answers to some of our the most commonly-asked questions about debt collection below.

Debt collection documents and templates

If you're dealing with debt, these documents and templates will help you respond, protect your rights, negotiate, and resolve your debts.

Debt relief

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt settlement

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created state guides on debt settlement. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

Eviction

Facing an eviction? The following guides will help you navigate your situation with confidence.

Federal debt collection laws

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Legal aid

Helping people find access to justice is at the heart of Solo's misison. If you're dealing with a legal debt issue, the following guides will help you through it.

Medical debt

Having a health challenge is stressful, but dealing with medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Personal finance

Learn how to manage your finances and overcome crushing debt. Check out our personal finance guides below.

State debt collection laws

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote guides on each state’s statutes and more.

Stop collection calls

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Wage garnishment

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in your state, plus other wage garnishment resources.

The Debt Hotline

Hosted by Team Solo, The Debt Hotline breaks down debt and personal finance topics with help from attorneys, financial experts, and industry pros. We respond to real questions to help you navigate debt with knowledge and courage.

Other debt resources


It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.


"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather



Get Started


Contents