Can you retire with debt?

by | Oct 16, 2023 | Future Planning

The short answer is yes. In a perfect world, everyone wants to retire debt free however that is not always possible.

This is because to fully retire you need to have some or all of your expenses being met by alternate  sources of income, either social security, a Super Pension or passive investment earnings – or a combination of these.

I’ve seen clients retire with debt secured against a portfolio of assets, whether that be property and/or shares. These assets then generate sufficient income to fund debt repayments AND meet the retirees living expenses.

Now this sort of retirement strategy may not be everyone’s ideal position, but nonetheless the point I am trying to make is that there is no one-way to “retire”. Supporting your retirement income needs will be based on your unique circumstances; hence why seeking personal financial advice may be of value.

What are some common strategies you could explore to enter retirement debt-free?

  • Consider downsizing your home – this strategy can sometimes result in the double benefit of paying off or reducing your mortgage as well as increasing your investable assets to provide you with retirement income
  • Look at your Super – in conjunction with professional advice, it might be prudent to look at options to utilise your Super to reduce or pay off your debt as you near or enter retirement
  • Review your budget and cashflow, and increase your debt repayments – if you have numerous years before your intended retirement, making additional repayments on your loan may improve your retirement position

Jayden Allison CFP®
MFinPlan, BCom (Eco&Fin), Dip. FS (FP)
Financial Planner

General Advice disclaimer

The general/factual information provided was done so without taking into account your personal objectives, financial situation or needs; you should consider the appropriateness of the general/factual information, in light of your own objectives, financial situation or needs, before following or relying on the general/factual information; if the general/factual information relates to the acquisition or possible acquisition of a particular financial product, then you should obtain a copy of, and consider, the Product Disclosure Statement (PDS) for that product before making any decision.