6 Unusual Expenses Worth Paying Off Before You Retire
6 Unusual Expenses Worth Paying Off Before You Retire
Vance Cariaga August 12, 2023
You can expect to experience many changes in retirement, and one of the biggest has to do with your finances. Unless you decide to keep earning money on the side, you'll be living on a fixed monthly income that doesn't include the normal work raises, bonuses or opportunities to increase your income by switching jobs.
This shift puts a premium on reducing your expenses in retirement to give yourself plenty of financial breathing room. According to an analysis from Fidelity Investments, you can expect to spend between 55% and 80% of your yearly work income throughout your retirement. About 15% of your post-retirement living expenses will go to healthcare costs alone.
One thing you will want to do is pay off as many debts as you can, including mortgages, car loans, student loans, medical bills and credit cards. Entering retirement free of debt can solve a lot of financial problems down the road.
You should also pay off other expenses that could potentially tie you down financially in retirement -- including expenses you've built up that don't fall under the normal financial umbrella.
Keep reading to learn about six unusual expenses that are worth paying off before you retire.
Personal Bank Loans
Personal loans provide lines of credit that can be used for everything from home renovations and medical bills to weddings, but they don't come cheap. The average overall interest rate for personal loans (as of Aug. 8, 2023) is a sky-high 21.4%, Business Insider reported. The average low rate is 10.17%, while the average high rate is 31.91%. Given these rates, paying off personal loans before retiring is one of the best financial moves you can make.
Family Loans
Borrowing money from family members has become more commonplace in recent years due to the effects of the COVID-19 pandemic, high inflation and soaring home and mortgage costs.
If you have a family loan, you probably pay much less interest than you would with a commercial loan -- though you have to pay some interest in order for it to be considered a loan instead of a gift. Paying off a family loan before you retire serves two purposes.
First, it lowers your overall debt load. Second, it will probably ease your personal relationship because the financial element is no longer involved.
Divorce Fees
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