Home Personal Finance We want to retire in about 5 years but have $150,000 in credit card debt and loans and $1.4 million locked in retirement accounts — ‘we want to be really retired’

We want to retire in about 5 years but have $150,000 in credit card debt and loans and $1.4 million locked in retirement accounts — ‘we want to be really retired’

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I I am seeking outside guidance so that I can retire within the next five years. To 7 years. IYou must work until you are 59 and a half to start using your retirement benefits.

I owe about $1.4 million in my 401(k) and Roth accounts, $30,000 in stocks, and $245,000 in rented homes, and my monthly income is $1,700, which pays for itself at a fraction of the cost.ttIt owes $158,000 and earns about $48,000 annually (between $10,000 and $15,000 net, depending on expenses). We own our own home with no mortgage, no car payments.

I have two children in college now and I am paying school fees.

The albatross around our neck is $150,000 in credit card and unsecured loan debt. The world has become expensive and our spending has gotten out of hand. We have most of them at low interest rates, but it’s still a staggering amount that we’re trying to cut, and we’re paying $2,000 to $3,000 a month for them. I have an income of $250,000, the range of which depends on my commission at work.

Our plan is to use bonuses from work and profits from short-term rentals to pay off debt. I also use Mint to budget and set goals to pay it all off using a snowball approach.

Every time you go on vacation, save cash and use that cash to pay for your expenses right away.

I’m worried if I’ll have enough when I reach retirement age (it was Currently 52 and 51). My wife says I’m stressed about money, but she won’t take a part-time job if she quits her job. we really want to retire

look: I am 60 years old with $95,000 in cash and no debt. I think I can retire, but at a financial seminar, I said, “I’m not.”

Dear Reader,

Life is bound to veer off course at times, and those detours, as you well know, can be very expensive.

The fact that you have a lot of savings for retirement and an additional source of income is great. As you are well aware, debt is a problem.

Retiring with debt isn’t inherently bad. For example, a reasonable mortgage is usually not a problem if the retiree can live with it and have a payment plan, but credit card debt should be avoided as much as possible. Given how much your spouse earns each year, your primary focus should be on getting rid of that debt completely before you retire, regardless of bonuses or short-term rental income.

Do not miss it: Do You Need To Get Out Of Debt Before Retiring? Here’s What You Need To Know

First, check your current expenses and see if you can find more cash to spare. If not, why? If not, review your spending and see if there’s anything you can cut.

As uncomfortable as this suggestion may be (sorry in advance), you may want to postpone your next vacation or take a less expensive vacation for the time being. Paying it off quickly is a great strategy, but if you cut back on those expenses once or twice, you can put that money toward debt and see your balance dwindle quickly.

I’m not saying that you should take away all the fun, or that you shouldn’t be on vacation for the next five to seven years until you retire, but find a trip closer to home, , staycation. There is a town nearby that I haven’t been to yet, and I might be able to go there on a day trip. Or enjoy a few dinners outside or stroll the beach or hiking trails.

If you’re keen on paying off your debt, it’s a good idea to transfer some of it to an interest-free credit card. There are also some that you can find with a long promotional period of 18 months or so. You must be able to pay it back within the period that it offers no interest. Otherwise, you’ll end up paying a lot of interest. Consider calculating how much you know you can afford to pay in a month, and multiplying that amount by the number of months you’re on the zero-interest offer. Then transfer much of that debt to an interest-free credit card and make sure to pay it off every month.

Here are some suggestions from Federal Trade Commission on how to get out of debt on your own or with the help of credit counseling.

Mint is a great tool and budgeting is even better. I applaud you and your spouse for staying on top of your finances and paying off your debts.

These rents are a great source of income, but when you’re calculating how much you’ll need in retirement, make sure you have a savings account for every property ready for emergencies. But you don’t want to end up in a situation where you need to fix two or three roofs on your main residence instead of one. Also, be aware that there may be vacancies or problematic tenant moments. budget for that.

Read the MarketWatch column “retirement hack” On Practical Advice for Your Own Retirement Savings Journey

There’s no magic number for how much you’ll need to save for retirement, but now that you’re less than 10 years out of retirement, you’ll have a better idea of ​​what retirement will look like (and what it will cost). will be Put all those numbers in order and come up with a few backup financial plans to make sure the unexpected doesn’t derail your retirement. Use some rates of return and inflation to understand how they affect your retirement spending, savings and taxes. Consider how much you intend to withdraw from these accounts and how that percentage will affect your balance at the end of the year (especially in moments of market volatility or recession).

Mind you, the amount you’re already saving is great — not everyone has that much savings for retirement, or even half of that.

As a retired reporter, I may be biased, but I think you’re right to worry about retirement. Of course, you shouldn’t be so stressed out that you can’t eat or sleep, but if you just want to do the math and make yourself and your family comfortable in your old age, that’s fine. Or This is especially true if you have no income from a part-time job or side hustle and are looking to stop working altogether after retirement. If you still have debt, it will be a burden both financially and emotionally.

Reader: Any suggestions for this reader? Add them in the comments below.

Got questions about your own retirement savings?Email us HelpMeRetire@marketwatch.com


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