Simple ways to lessen your financial load after 50
By the time people reach their fiftieth birthday, many have begun to imagine what their life in retirement may look like. Though data from the U.S. Census Bureau indicates the number of people working into their 70s increased significantly during the first two decades of the twentieth century, the vast majority of professionals still call it a career sometime during their 60s.
Retirement may still be a long way off for people who are 50 or in their early 50s, but around this time thoughts of what retirement could be compel many people to seek ways to reduce their financial load in anticipation of the day when they will no longer be working. Cutting back needn’t be complicated, and the following are some simple ways for individuals 50 and over to save money.
• Address unsecured debt. Unsecured debt, which can include credit card balances and medical bills, tends to carry higher interest rates than debts that carry a collateral requirement. According to the Federal Reserve, roughly 12.5% of individuals over 50 still have student loan debt, which is another type of unsecured debt. If possible, people over 50 should pay off these debts immediately or make their best effort to pay extra each month so they are paid off as soon as possible.
• Pay in “cash.” It’s not enough to simply pay off unsecured debt like consumer credit. It’s also important to stop accruing additional debt. Individuals over 50 should resist the temptation to use their credit cards, instead paying with cash or debit cards. Credit card debt is often characterized as a problem
for young consumers, but a 2021 report from ValuePenguin found that the median credit card debt among individuals between the ages of 55 and 64 was higher than it was for consumers aged 35 to
44. Paying in cash, whether it’s with paper currency or a debit card, ensures you’re not digging yourself into debt.
• Reexamine your housing situation. Adults 50 and over who purchased their home in their late 20s or early 30s are likely nearing the maturity date on their mortgages. If so, paying a little extra toward the principal each month will help you pay off that mortgage a good deal earlier than if you keep paying the same amount you’ve been paying for years.
Though paying extra money each month may not seem like reducing your financial load, it will do so considerably over time. For example, the financial experts at Wells Fargo note that individuals with a fixed-rate mortage loan of $200,000 at 4% can cut the term of that loan by more than 4.5 years by paying as little as $100 extra each month toward their principal.