Podcast Episode 385: Is It Okay to Carry Debt in Retirement?
Managing your money in retirement is much simpler when you don’t have to debt to account for, but there are times when debt isn’t necessarily a bad thing. In this week’s Money Wisdom question series, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® tackle a listener’s question about whether it’s wise to carry debt into retirement. This discussion addresses the pros and cons of carrying debt into retirement, particularly focusing on mortgages and home equity lines.
It’s not uncommon to have conversations with clients about the merits of being debt-free versus maintaining low-interest debt like mortgages and home equity lines. Not all debt is created equal and understanding the difference between good and bad debt is crucial. Good debt, such as low-interest mortgages, can be a strategic financial tool, while bad debt, like high-interest credit card balances, can be detrimental to your financial health.
Like much of financial planning, it often comes down to math. Interest rates play a big part in determining the quality of debt. You have to weigh opportunity costs and how the money tied up in debt could potentially work harder for you elsewhere. Interest rates can impact your financial strategy, especially in retirement, so make sure that’s one of your considerations.
Cash flow management is another vital topic covered in this episode. Managing your cash flow effectively can help you maintain financial stability in retirement. But be careful about becoming “house rich and cash poor,” where all your assets are tied up in your home, leaving you with limited liquidity for unexpected expenses.
No matter where you are in your retirement planning journey, the “Are You Ready to Retire” Starter Kit can be a very helpful tool. Get access to it by texting KIT to 800-757-0436, and make sure you tune in to the Money Wisdom podcast to gain a deeper understanding of debt management to help ensure you’re on the right path to a secure and fulfilling retirement.
Here’s what we discuss in this episode:
0:00 – Intro
1:19 – Today’s question on debt
1:46 – Good debt vs bad debt
3:11 – Threshold for good debt
6:30 – Debt in retirement
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
How Can You Protect Your Retirement Assets for Your Family?
When you’re focused on planning for retirement, it’s easy to overlook how you can protect your assets for both yourself and your family. While there’s no one-size-fits-all approach, your first ste… -
Podcast Episode 409: Which Retirement Accounts Should I Withdraw from First?
Prefer to watch? Click here to watch and listen on YouTube. Planning for retirement doesn’t end when you stop working. In fact, one of the most important financial decisions you’ll face in reti… -
How to Jumpstart Your Retirement Planning
Retirement planning can feel overwhelming, especially after decades of hard work and diligent saving. With so much to consider, how can you ensure your money lasts as long as you do? The good news… -
What Level of Risk Is Right for Your Retirement Plan?
In this week’s Money Wisdom Question Series, Ian Fergusson, RICP® addresses a fundamental concern for anyone approaching or in retirement: What level of risk is appropriate for my retirement plan?… -
Podcast Episode 408: What to Do in a Down Market
Prefer to watch? Click here to watch and listen on YouTube. As recent market fluctuations have stirred up a lot of economic uncertainty, there’s a particular question on many investors’ minds: … -
What Estate Planning Steps Should I Take?
With retirement on the horizon, you may be wondering what steps you should be taking from an estate planning standpoint. At its core, there are three key estate planning considerations to keep in … -
Case Study: What Should My Investment Portfolio Include?
As you approach retirement, your investment strategy must shift from aggressive growth to a focus on income generation, asset preservation, and moderate growth to outpace inflation. Consider th… -
Podcast 407: Is My Social Security Income Taxable?
Prefer to watch? Click here to watch and listen on YouTube. A common misconception about Social Security is that whether your benefits are taxed depends on the state you live in. While state ta… -
How Can I Protect My Retirement Savings from Market Volatility?
We’ve been receiving a lot of questions lately about how to best protect your retirement savings against stock market volatility. It’s easy to let recent fluctuations in the market shake your conf… -
Avoiding the Retirement Tax Trap
Once you retire, understanding your tax implications becomes even more crucial. After all, taxes don’t disappear in retirement. In fact, as you begin withdrawing from your retirement savings, you …
