How Credit Repair Can Make or Break Your Retirement Planning

credit repair and retirement planning

“The more things change, the more they stay the same.”

The older we get, the more we recognize the truth in that old adage. No one can claim that things aren’t changing faster than ever in the United States, and around the world. Medicine, communications, transportation, the economy… there’s not a single aspect of our lives that hasn’t changed dramatically in just the last few decades.

But, despite all the changes that have already occurred and all those that are sure to come, there’s just as much — if not more — that’s the same as it ever was.

For example, it’s an unchanging fact that hardworking Americans want and need to take care of themselves and their loved ones, no matter what life throws at them. That was the case when our parents and grandparents struggled to put food on the table during the Great Depression; when millions of American men went off to war in defense of freedom and democracy; when some of them returned and started building families in a United States that would never be quite the same again.

And it’s still true today, when the baby boomers born at that pivotal point in American history have finally reached retirement age after decades reshaping the world to fit their generation’s unique and powerful mixture of ambition and security. They’ve spent their lives raising their own families, caring for ageing parents, carving out a legacy of their own, all while trying to ensure they’d be able to afford to live comfortably in a world that’s never again going to hand out secure pensions to everyone who’s worked hard to earn them.

Against all odds, many are accomplishing just that.

But it requires excellent planning, self-discipline, and help at the right time.

Where retirement planning went awry

While most baby boomers retiring now can’t rely on secure pensions like many of their fathers could, self-funded retirement plans have been available for long enough that 401(k) and Roth IRA accounts are fairly commonplace.

Additionally, the Boomer generation has done exceptionally well for itself financially as a whole, so hefty savings and real investments (such as real estate or precious metals) are also a routine part of retirement planning conversations.

But, there is one area where the Boomers have also outdone any generation before them, and in this case, it’s to their detriment:

They’re absolutely swimming in debt.

As a group, the generation currently retiring across the country has the greatest accumulated wealth of any generation in American history, but their net worth is another story since so much of that wealth is tied up in debt.

This interesting interactive infographic by Deloitte University Press highlights that, while they led the nation controlling upwards of $42 billion in assets in 2015, Boomers were also saddled with over $6.1 billion in household debt. Considering the average credit card interest rate in 2015 hovered around 13.5%, and mortgage rates ranged as high as 16.4% during their house-hunting years, that’s an expensive burden.

As a result, many baby boomers are finding themselves with less in their self-funded retirement accounts than they’d like because so much of their earnings over the last three decades of work went to paying off debt. And, the debt still exists even as the income is naturally falling.

Combining that inevitable trend with the effects of the Great Recession (which hit just as the oldest baby boomers turned 62,) and the ongoing issues with Social Security and Medicare, maintaining an adequate income during retirement has been a challenge — if not downright impossible — for many.

How can credit repair help turn things around for retirees?

Retirees seeking to maintain a reasonable standard of living on a reduced income need to take practical steps to get their debt under control. Those steps come down to three simple (not necessarily easy) steps:

  1. Reign in spending dramatically to avoid increasing debt.
  2. Utilize professional resources to repair credit as quickly and efficiently as possible.
  3. Pay off debt as quickly as possible.

Stop creating debt

The first step is more a matter of self-discipline than anything else, and baby boomers have proven themselves capable of incredible feats of self-discipline over the years. While they’ve lived through economically prosperous times in the United States on the whole, they’re not too young to have learned harsh but valuable lessons from their parents and grandparents about going without when times are lean.

By creating a realistic budget and committing to it, debt no longer needs to be an ongoing, inevitable part of everyday financial life.

Repair your credit

Credit repair is often mistakenly viewed as some sort of last resort for those who are teetering on the brink of bankruptcy, but that’s not the case. In fact, monitoring and repairing credit history is a far smarter and more valuable move for someone who still has the means to take positive steps toward paying off their debt than someone who’s already so far over their head, few other options exist.

For retirees needing to preserve every dollar they can, investing in professional credit repair services and consultation can be incredibly valuable. From simply verifying that the information appearing on their credit report is accurate and up-to-date, to receiving valuable advice on how to best approach a debt reduction and elimination strategy, Boomers can save time, money, and effort by working with credit repair professionals to resolve any current issues and maintain their credit going forward.

Pay off debt strategically

Once you’ve stopped adding to your debt and confirmed your credit report information is accurate and your score is as high as you can make it, you’re in an optimal position to start paying off your debt in a strategic way.

In many cases, that doesn’t mean throwing every spare dollar you have at paying it off as soon as possible. Again, a credit repair professional or financial advisor is in the best position to help you decide the best course of action, but it’s important to realize that debt can be a powerful and useful tool when it’s used wisely and strategically. During the retirement years, when income is limited and expenses can be unpredictable, access to quality credit can be invaluable.

As noted at the outset, despite all the changes the current generation of retirees have faced — and will no doubt continue to face — more has stayed the same. As their children and grandchildren eventually make their way to retirement age, no doubt that trend will continue. So, as they have for decades already, American baby boomers are once again leading the way with a solid mixture of wisdom, determination, and grit… and the help of professionals who know how to make the most of ever-changing conditions.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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