Why Paying Off Debt Before Retirement is More Important than Ever

In What to Do if You Cannot Afford to Retire we laid out five separate strategies to help you create at least a comfortable semi-retirement. The five strategies included saving money, getting out of debt, selling your home, continuing to work, and adjusting your expectations. We?ve already done deeper dives on saving money (no matter what) and selling your home. Today I want to focus on paying off debt before retirement.

Welcome to the Age of the Indebted Retiree

That debt of all types has been on the rise in the US in the past few decades is an accepted fact. Less well-known is that increasing debt levels are also common to both retirees and near retirees. The following chart tells the story:

Why Paying Off Debt Before Retirement is More Important than Ever
Why Paying Off Debt Before Retirement is More Important than Ever

(Source: Employee Benefit Research Institute Debt of the Elderly and Near Elderly, 1992 – 2013)

The chart shows that debt increased among three groups age 55 and older:

  • For ages of 55 to 64, debt increased from 71.4% of households in 1992, to 78.5% in 2013.
  • Among those 65 to 74, it increased from 51.5% to 66.4%.
  • Finally, for those 75 and older, it increased from 31.9% to 41.3%.

Figures only run through 2013 but we should suspect that they?ve only increased since. Debt levels tend to increase during economic expansions, and then contract in recessions. Since the economy has been mildly improving since 2013, an increase seems like a reasonable assumption.

The point is however, where getting out of debt was once a primary retirement goal, attitudes are changing. I believe there are two reasons why this is happening:

  1. The cost of living is rising relentlessly, even higher than the official rate of inflation. People are borrowing to make up the difference.
  2. The average person today has a much more benign view of debt than was the case 25 years ago.

Debt has largely replaced cash as the primary method of payment. In various buying decisions, from widescreen TVs to college educations, it?s simply assumed that debt will be part of the equation. But debt that?s comfortably tolerated during the working years can become an unsustainable burden in retirement.

Why Paying Off Debt Before Retirement is More Important than Ever
Why Paying Off Debt Before Retirement is More Important than Ever

Why Paying Off Debt Before Retirement is More Important than Ever

It?s ironic that debt levels are increasing among the retired and near retired, given the rising difficulties with the whole concept of retirement. Traditional defined benefit pension plans are fast becoming extinct, and the vast majority of people have little or no retirement savings.

Here are just a few reasons why paying off debt for retirement is more important than ever:

Paying off debt improves cash flow better than investing. Paying off $10,000 in credit card debt with a $200 monthly payment will improve your finances more than investing the same amount in the stock market. The historic average return on the S&P 500 from 1928 to 2016 is about 10%. That will generate an annual cash flow of $1,000. That?s a lot less than the $2,400 in monthly payments you?ll save by paying off your credit cards.

Lowering your cost of living. The often unspoken ?other half? of retirement planning is lowering your cost of living to fit within your income. By paying off your debts, you lower your cost of living, often substantially. The lower cost of living means that less income is needed.

Increasing your mobility. Debt limits your freedom of movement. You can?t quit a job because you have debt. You can?t make a geographic move because you have debt. Helping a family member in need is impossible, because you have debt. When debt is paid off, you?re free to do whatever you want. I think that?s one of the aspects of retirement that people really look forward to.

Freeing up cash flow to create more retirement savings. If you can pay off debt before you retire, you?ll have that much more to put into savings once the debt is paid.

Now let?s look at each type of debt individually.

Credit Card Debt

When I was in the mortgage business, the saying was once a Visa, always a Visa. There?s a reason why they call credit cards ?revolving debt?. The principal portion of the monthly payment is typically borrowed back the following month or shortly thereafter.

Do you see what a trap that is? Sure, you may intend to pay off your credit cards, but it never seems to work out that way. That?s because credit cards are not designed to be paid off.

The big problem with credit cards is psychological. You become emotionally attached to the benefit that it provides ? mainly, cash when you have no cash. It means that you don?t have to say no to yourself or someone else.

That’s addictive. And that?s the problem!

If you spent a lifetime caring credit card debt, it won?t be as easy to suddenly given up once you reach retirement. Credit card debt is a lifestyle as much is anything else. Unless you purge them from your life, they?ll always hang around. And always but you in the butt at the worst possible time.

Payoff strategies. Credit cards are hard to pay off because it?s so easy to run them up again. The easiest strategy is to set a flat payment amount that you will pay until the card is fully paid. If you owe $10,000 on credit cards with an average interest rate of 15%, and you make a monthly payment of $250, the cards will be paid off and 56 months. Use a credit card calculator to help you figure this out.

Of course, you?ll need to put cards away and not add additional charges to the current balances. That?s the emotional part of the pay off, and it?s not always easy.

Auto Loans

I?m really on the fence about car loans. It?s always best to not owe any money on your car. There are definite risks to car loans that most people never think about. But on the other hand, the accountant in me sees the virtue in spreading the cost of a high-priced asset over several years.

An auto loan isn?t the worst type of debt to carry into retirement. If your income can handle the payment, it can be better to spread out the cost, rather than withdrawing a big chunk of your savings. This is particularly true of savings are limited.

But if you do carry a car loan into the retirement years, don?t get carried away. There are some good practices to keep in mind:

  • Make sure the payment doesn?t exceed 10% of your monthly income. Less is even better.
  • Keep the loan term to not more than five years. At that point, you?ll start to have car repair bills. You don?t need to have a car payment at the same time.
  • Don?t trade the car in for a new one every five years. Your transportation needs should decline as you age.
  • Make the largest down payment you can. That will minimize the car payment.

Payoff strategies. It really depends on where you are with the loan. If you?ve recently taken a $30,000 loan, you won?t want to pay that out of savings if they?re limited. But you might if you say, have $10,000 remaining with a $400 a month payment. Removing that payment will significantly increase your cash flow. Then plan to keep the car for a few more years. You can get around the repair cost issue by hooking up with a good backyard mechanic.


If you don?t have your mortgage paid off by the time you retire, you?ll probably just have to find a way to live at peace with it. It?s very difficult to pay off a 30-year loan in just a few years. Worse, most people get so comfortable having a mortgage that they make little progress paying it off. Multiple refi?s keep setting the clock back to year one. It?s no longer unusual for people in their 60s having mortgages with 15 to 20 or more years remaining on them.

If you have that many years remaining, you won?t be able to pay it off on a lower retirement income. If there are lower-cost places to live, that option should be considered.

Mortgage strategies. Options can include either moving to a lower-cost rental situation, or selling your current house and trading down to a less expensive one.

In the case of moving to a rental situation, it can make a lot of sense if your payment will be substantially reduced. For example, if you?re lowering your house from $1,500 per month, down to $1,000, it?s certainly worth considering.

There are potentially additional benefits as well:

  • Once you retire, the tax benefits of homeownership aren?t as generous as you think.
  • By moving to a rental situation, you won?t have the expense of property repairs and maintenance.
  • By selling your home and moving to a rental, you can use any equity from the sale to increase your retirement savings.
  • Renting will provide you with more mobility, should you decide that you want or need to move in the future.

Downsizing to a less expensive home can work well if you have enough equity to purchase a house that won?t require a mortgage at all.

Student Loan Debt

This one?s gotta go. It?s unsecured debt ? just like a credit card ? but there is virtually no option to default on it. Most can?t even be discharged in bankruptcy. In case you weren?t aware of it before, 15% of your Social Security benefit can be garnished for an unpaid federal student loan debt. That?s in addition to the potential to garnish your bank account. This is serious stuff.

In most cases, it won?t be a would-be retiree?s own student loan debt in question. It would almost certainly be a cosigner situation for the debt of one of their children. But you should know that should your child default on a student loan for any reason, the lender can come after you personally. That?s the whole idea of adding a cosigner to the loan.

For that reason, student loan debt should be eliminated before retiring. Even if your child has been faithfully making the payment for years, a divorce, loss of a job, or a medical emergency could change that situation quickly. At that point, you?d be on the hook.

Payoff strategies. If the debt can?t be paid off, the next best strategy is to get a cosigner release. This is possible on many student loans, though your child would need to qualify for the new loan based on their own financial resources.

But just because a cosigner release is available, doesn?t mean that it will be granted. When a lender releases a cosigner, their security on the loan is instantly weaker. For that reason, release is not automatic. But it?s always worth a try.

Final Thoughts on Paying Off Debt Before Retirement

I hope I?ve succeeded in making the case that it?s necessary to pay off debt before retirement, as well as what the consequences are for not doing so. Most discussions of retirement planning gloss over this issue, as though getting out of debt is assumed. In today?s economy, that?s an increasingly weak assumption.

One of the fundamental problems with debt in 21st century America is that it?s much easier to get into it then it is to get out of it. But when retirement comes around, it takes on a whole new dimension.

If income and retirement assets will be limited, lowering your cost of living will become infinitely more important. Paying off debt will be a critical part of that effort. The last thing you need to be doing is carrying debts from your working years into your retirement years. For this reason, paying off debt before retirement should be given equal priority with saving money. Not the least of which because saving money becomes so much more doable once debt is out of the picture.

What are your thoughts about paying off debt before retirement? I know it?s a complicated subject because everyone?s situation is different. What strategies can you offer that would help someone make it happen? What strategies are you using yourself?

( Photo by aronbaker2 )

27 Responses to Why Paying Off Debt Before Retirement is More Important than Ever

  1. You know, I’ve also seen early retirees fall into this trap. It’s a “I can retire early now so I will!” mindset, even when they still have debt. Sometimes the numbers can work out that way, but the world and economy is far too fickle to retire with debt still on your plate. We’re even paying off our mortgage before going into retirement, just to be safe.

  2. That’s all true. With people living 20-30 years or more in retirement, you really have to think long-term and debt is a threat to that long-term. But when people get comfortable with debt they may not even realize it. It’s like that commercial about going “nose blind”, except that people become debt blind. I also think that when people decide they’re going to retire, they just do it. Debt, or other obstacles aren’t permitted to get in the way. But when I see the number of elderly working these days it gives an idea of what happens when you miscalculate. Based on the numbers, I’m guessing there’s a lot of miscalculating going on. Of course, some of them are in that position because they spent a lot of money helping their kids, but that’s another topic entirely.

  3. Great talking points, no sense taking on more credit as you enter into the financial situation of an income that will remain the same once in a retired state. We all have dreams of working forever until the day we die but that doesn’t always plan out. The big point here is that as you get closer to “retirement age” you should have a fair idea of needed income from whatever source to meet your basic needs. We already established in this blog, that we need to control our costs and not depend on getting much help from government aid.
    If you are part of the age group, I am in, life along the way to retirement wasn’t as smooth as promised. We, unless we were lucky, had job changes along the way (no guarranteed job for life) plus faced age discrimination for several reasons (mainly because our labor costs were considered too high for the companies we worked for). We were forced to train our replacements and laid off.
    I used to tell my younger coworkers, you need to take a good hard look at your finances as soon as you reach 60 to prepare for retirement, but now I tell people to start at age 50. One of my friends who was in their 50’s wanted to get their son a brand new car because he didn’t want to use the car he had been using after it had been repaired after an accident he had. It was a good car and in good condition and paid off. He just wanted a fancy new car, paid for by daddy and mommy. I told him to not buy the car unless the son was willing to carry the burden of the cost. That kid was very unhappy that he didn’t get a new car, but it was a good thing as the mother who was the bigger earner lost her job and they had to tighten the budget and after she got a new job, the company,that the husband I worked out closed the entire company by bankrupcy.
    The age of always giving our children everything has passed. If we, the adults, want to live a nice long healthy life, we have to be real in our dealings of finances. Life isn’t like it is on Shameless where everyone scams someone.

  4. Hi Maria – You’ve made a lot of good points. I agree people have to “get religion” about retirement no later than 50. Unfortunately, 50 is when the storms of life hit for a lot of us. I know that was the case with me. That’s when I had to change just about everything about my life, including my assumptions about the future. In the end, I think I’ve come out better for it. Dealing with reality is so much better than trying to live a fantasy. Enough people are doing that, I don’t need to be one of them. I was just chatting with a good friend of mine, also in his 50s, who just found out he has a health condition. Few things in life force us to sober up like getting that news. We both agreed that we’re guaranteed nothing in life. That’s a lesson we all need to learn. As Og Mandino used to say, “You’ve got no contract with life.” How true, but we’ve been sold a bill of goods along the lines of “the world is my oyster”(or should be).

    I’m glad you brought up about parents spending money on their adult kids. That’s something that’s hurting a lot of retirees and pre-retirees. It’s bad enough to over-indulge small kids, but adult kids are even worse. Not only are you blowing your own resources to “help” them, and thus weakening your own finances, but you’re also making them weaker adults. A spoiled adult kid continues to believe in the fantasy version of life, and believes he’s somehow entitled to the good things in life without making any effort. It would be better if parents would see how crippling that is for their kids.

  5. One point I wanted to make. This happened to my mother. Her doctor kept adding new pills to her resume every time she went to the doctor. He was also doing all kinds of unneeded tests all the time.
    All this was mounting up and killing her finances.

    She never needed half of that crap. He had her on three or four different vitamins. Pills for brittle bones. She 86. By that age everybody has brittle bones.

    I finally put a stop to all of it and she suddenly had money. She was totally taken advantage of by doctors pushing needless pills to pad his pockets.
    That was three years ago, She is still alive and physically fine.

    I suspect there are a lot of seniors out there who are taking all kinds of pills they really don’t need.

    This also wrecks havoc on a retired persons income or lack of. I see seniors working at McDonalds. Some are 75 years old. Some are doing it because they can’t afford all the pills that are shoved down there throats.

    I agree with the no debt. If anybody has read any of my comments you know debt of any kind is the absolute enemy.

  6. Hi Tim – Don’t get me started on this one! So many of the elderly are on drug cocktails. They’re on three or four different meds for known symptoms, then three or four more to counteract the side effects of the main meds. Not only does that drain their finances, but it also leaves them in a stupor. Too many meds mess with the mind and body. I think that’s why so many of the elderly seem “out of it”. I don’t remember older people being zombie-like back in the 1970s, when fewer pills were doled out. But today so many look like they’re out of it.

    Also, a 30 year old girl I used to work with passed out on the job one day. Turns out she was on 6-7 different prescription meds, and had a negative reaction. When she went to the hospital the first thing they did was take her off ALL meds. She got better in a day or two, then cut back on the meds from then on.

    A lot of these meds are being prescribed in combinations that have negative effects. Too much is too much, period.

  7. Good for you Tim! That is another article for Kevin *hint hint* lol

    Oh so much content there. Gotta train your parents early about medicines and doctors.

    I’ve never had a mammogram and just started getting yearly pap smears (at almsot 50) due to being at higher risk. Otherwise in my lay opinion, now the majority of these “tests” cause more problems than the fluke negative result they might produce. A combination of modern medicine with more of a lean on food=medicine would do most people, more good. But since we don’t all fit into a perfect box, it is our responsibility to know our health conditions, study them, understand which foods may help, exercise, understand medical treatments, how they work and their purpose. Plus the risks to those treatments. Also thank you Kevin for such an insightful, easy to understand website concerning financial issues and more

  8. too many commas in my last post. Feel free to edit if needed if you choose to post it. Blessings to you Kevin

  9. Hi Maria – About never having a mammogram, my mom didn’t go to the doctor most of her life, and she’s now 91. Yes, she has an assortment of conditions, but that’s old age. I’ve been around cemeteries dating from the 1600s and 1700s and couldn’t help but notice that even well before the days of modern medicine, a substantial number of people lived into their 80s and a handful into their 90s. Most of what led to an early grave before the 20th Century were infant mortality, complications of child birth, infectious diseases, and serious injuries due to hard labor. A person surviving those could live about as long as someone today. So much of what we ascribe to medicine is more about economics and living standards. Think about the impact on longevity of things like refrigeration, hot and cold running water, central heat, water purification and less hazardous occupations. My guess is that the healthcare we’re paying so dearly for has probably added no more than 3-4 years to the average lifespan. Most of that is through immunization and better infant delivery techniques. And those are actually the low tech/low cost sides of healthcare.

    I’m getting off on a tangent here, but this is another of my soapbox issues.

  10. Hi Kevin. Yes, I think we all can agree that debt, at any age, is the enemy but especially more so as we age. Sadly, I’ve been witness to several people be trapped by their debt in their older years (60’s and beyond) and unable to do anything about it because they were no longer earning their full-time salaries. I think it’s important to point out that a part-time job at this age bracket shouldn’t be used to help you “get by.” But this is what’s happening. Instead of using these part-time jobs to perhaps pay for some hobbies or luxuries, they are needed to meet essentials like utilities and food, etc. You will never get out of debt like this. The time to do it is when you are still earning a more substantial income. Bring a medical situation into it, and it’s all over. People are struggling to get what’s left of their home equity to pay their bills and are lost because of trying to do all the paperwork involved with these loans. Another suggestion for you to write about….learn to keep good records of your finances so that if this scenario does occur, you, or a family member won’t be looking under the couch cushions for your tax documents and old W-2’s. And when one spouse does it all and no longer can, the other is lost. Perhaps you have written about this, but I just haven’t seen it.

  11. That is a good topic to write about Bev, and I actually have on other websites. But what I’ve found is that in most cases where one spouse handles the business stuff, the other can’t be bothered, or the “responsible spouse” is a control freak who can’t let go. This seems to be true in all too many cases. My wife and I try to balance this out, by both being involved in the process. We’ve been together for 33 years, but still have separate checking, savings and credit card accounts. We also divvy up the bills. On our last car purchase, I purposely made her handle it, and she did it beautifully. But I’m not sure most couples operate that way. It becomes a disaster when the business spouse dies, but that’s not a point that can be successfully made before that happens. People get too comfortable with the status quo, and are virtually change resistant (like we talk about with politics and the economy).

    I also totally agree that part-time work in retirement should mostly be done for the extras. Necessities should be covered by Social Security, pensions and retirement savings. But we know that life is messy, and that doens’t work out in most cases. The whole reason we even need to discuss these issues is to shed some light on living imperfect lives in an imperfect and increasingly dysfunctional world. That means we’ll always have a lot to talk about 😉

  12. Learning to live within a budget, one that has been figured out by individual for their needs is not an inherited skill but a learned skill. Unfortunately that skill training has been eliminated for more development of social skills. I personally had to learn the hard way as pre-request for a bankcrupcy. If everyone had to take a credit balance course which deals with the actual situation one has financially, you make better decisions about how to spend money.
    I am not saying that we all need to become stingy with money but better spenders. Don?t fall for those come on sales approaches, do your research and know what you want.
    We are the consumers for everything and if we as a group decide what costs we will bear, we can push for reasonable cost, using the economics of supply versus demand. If we don?t buy at the high cost demanded sooner or later that cost will have to slide down. Take the removal of the individual mandate for healthcare insurance, I would rather pay $695 cost over paying over $10,000 yearly at this point in my life. I personally have been lowering expenses I pay for ( getting rid of debt) to be able to put money away for an emergency fund even if I have to stuff my mattress ( just joking).
    Having a budget allocates funds to cover necessities and money for pleasure spending but everything has limits.
    If our education system doesn?t teach this, we need to teach our children that life has limits and we need to adapt. Like Forest Grump said a bowl of cherries has pits, too.

  13. Hi Maria Rose – This is yet another of my soapbox topics, that personal finance isn’t taught in the schools or in college. So by the time a kid goes to college she borrows a bunch of money because she doesn’t understand the implications or consequences of debt. All she understands is that debt will get her that hallowed education that will make her a success in life. It’s a snow job of the highest order and a brilliant marketing plan at the same time. The schools probably only encourage this debt cycle, since it reinforces the whole education industry across the board. It’s a national disgrace.

    It’s sad but true that if you don’t learn personal finance early in life you’re forced to learn it in the school of hard knocks. That’s usually bankruptcy, foreclosure or some other impossible financial hole. By then it’s too late, but you get religion after that. Hopefully it’s a lesson learned before retirement. Problem is, by then financial resources are limited. But any debt payoff and any savings will help no matter what, and is always better than doing nothing.

    This is when you realize that real life is nothing like TV.

  14. Well based on some of the changes being made to student loans, as I understand it, that snowball talk about how a ?college degree ? guarantees a great well paid job may be slowing down or not as encouraged. Those guaranteed funds that certain colleges get has to be balanced out by the amount of PAID student loans. So those colleges ( including Ivy League ones) have to show a proven success rate in their graduates.
    Maybe this will trickle down to better courses for all education to improve learning basic life skills. ( Like life is not just a self indulgent path but learning to ride the bumps which means effectively dealing with financial decisions based on deductions rather than impulse.
    Planning for life after a certain age means trying to plan somewhat for the future without leaning on external circumstances in other words being self reliant. You suggest being an independent entrepreneur, I suggest if that?s not your thing to not spend frivolously, best way I can explain it, is react to life without trying to outdo others as a need to show off, by taking care of your own needs.

  15. I hope you’re right about this Maria, it would definitely be a step in the right direction. The simplistic belief is that by getting a college education everything in life will fall into place. That’s obviously not true, but the belief persists. I think it’s partially laziness. Many want to believe that the job of educating young people can be turned over to the institutions – what Charles Hugh Smith refers to as the ‘factory model of education’. The person will graduate with a degree certifying that he’s “legitimate” and ready/entitled to succeed in the world. But nowhere are the critical non-academic lessons taught – how to manage money, how to interact with people, how to have a realistic view of life, how to survive tough/unfortunate times and circumstances, how to build a business, etc. People come out of college, and unless they’re in the in-demand careers, they’re effectively crippled as adults.

    It’s weird; as a culture we’re more informed and educated than ever. But in some of the most tangible ways, we’re completely ignorant. But that’s the result of simplistic thinking. No amount of education can fix that.

    (Have you noticed that no matter what the main topic is we always veer off into other issues? I think it’s because all of these issues are related and even part of the same bigger picture problems. That’s why it’s perfectly OK to go off topic.)

  16. Hi Kevin,
    What a timely article! My wife and I are in that pre-retiree age group in our late fifties. We have 18 years left on our 30 year mortgage which will be refinanced shortly to a 15 year HARP loan with a lower interest rate and lower payment. We only have about $75K in our retirement accounts.

    Recently I heard some good advice: “Spend windfall earnings on investments or paying down debt”. Well, thanks for confirming that paying down the debt is the right way to go. We just applied my Christmas bonus to the mortgage principal.

    So any extra “windfall earnings” that come my way are going to be applied to that mortgage principal. Selling baseball cards and other items on eBay, credit card rewards, and any side gig earnings will go there also.

    Thanks for this article and all that you do!

  17. Thanks for checking in Pat. Yeah, with 75k in retirement savings, paying off your mortgage will really make a difference. You’ll eliminate what’s probably your biggest expense, which means you’ll need less income. I’m guessing that paying off your mortgage will lower your expenses more than an equivalent amount of money invested would generate in income. As well, the rosy investment returns of 7-10% aren’t guaranteed; paying off your mortgage is. It’s a can’t miss strategy from a cash flow standpoint.

  18. Kevin,
    I am totally convinced that you do not need a college degree to do 90 percent of the jobs out there. There are exceptions but I’m pretty sure I could be a lawyer without college. I few years of reading law books and on the job training and I know I could do it.
    I’m convinced I could be president , in the FBI or CIA without college. You don’t need a college education to teach 5th grade.
    Any trade could be learned on the job.

    I barley got out of high school. Had a 25 year law enforcement career. Started my own business and built it into a growing business in four years. All with a high school education. I know more about finance than 80 percent of the planners out there.
    I know a lot of the tax code. Why are financial system is a complete sham.

    I’ve gotten to the point where I can almost predict how things will go 90 percent of the time. It’s all life experience. No college.

    It’s a shame that whole generations are forced into college just to get a job. Causing them to be enslaved for life.

    80 percent of the adults walking around now are just old kids.

    Your right, it’s all tied together.

    I didn’t say all that to toot my own horn. Just to make a point that you don’t need college for most jobs. The titans of the early 1900’s had no college.
    Caniege, Rockafeller, Morgan, Ford none of them.

  19. I hear you Tim. Thomas Edison, widely acknowledged as the most prolific inventor of all time, had no more than a 4th grade education (and he was partially deaf). CHS said it best when he said that a college degree is a signalling device more than anything else. It confirms that the holder has “passed muster” and is eligible for employment, but it doesn’t indicate that he/she actually knows how to do the job. I have an accounting degree, but I didn’t learn how to be an accountant until I went to work for a CPA firm. And blogging – forget it, there’s no college degree for that. And yet it’s hands-down the best career/trade/skill/field I’ve ever been in.

    Where our culture is dropping the ball is in not emphasizing and teaching entrepreneurial skills. They’re also not emphasizing true creativity, or acknowledging the reality that the answer to most problems are outside the box. We were once a nation of shopkeepers, farmers and skilled tradesman, and now we’re a nation of paper pushers, many of whom aren’t even sure that what they do is entirely necessary (born out by studies, if you can believe it). I’ve also seen people with low level jobs/incomes who are/were so good in managing money, that they end up being prosperous. I’ve seen all of this enough to know that college is heavily over-rated and over attended.

    Think about it, the average college graduate doesn’t even know to stay out of debt. They don’t teach that in school. And when you’ve been in school virtually all of your life until you’re 22 or 25, how would you even know? The whole construct is messed up on so many fronts.

    But let’s bring this thread back on topic. So Junior is in his 20s, burdened with low pay and a crushing student debt, that’s co-signed by the parents, who are also struggling to prepare for retirement. This is exactly what I mean when I say that all of these assorted problems are really sub-parts of the same Big Problem. Junior is struggling to get into a solid career path, and mom and dad are struggling to get out. But they’re both hampered by the same problem.

    I need to go pray…

  20. I just wish that people would have some kind of awakening. Debt is not a lifestyle. The things that worked 40 years ago do not work today.
    My father used to drive off the lot with a brand new car for 3000 dollars.

    All these industries are so out of whack with everyday normal middle class people. Auto, Home, college etc etc Wages have not kept pace. But yet we keep going to the same wells trying to get a different result.

    Your a big reader of Doug Casey so you know how down he is on American education period. I agree with him. Not only do I feel it’s useless in 90 percent of the fields but it also forces a debt load down peoples throats that effects some half of there lives or more.

    With the current job market. What makes seniors co sign for loans? Especially for college. Over half the graduates can’t find jobs or settle for anything not related to their degrees just to make some money.
    It always ends up being the co signers burden.

    Financially speaking getting out of debt and staying out is more important than investing.

  21. I agree strongly with your last comment Tim. If you get on the debt cycle, it robs you of your ability to save money and to just live your life. You’re constantly paying for past sins in a real way. Your past has a lien on your future. What people don’t realize is that it’s very easy to get on that treadmill and godawful to get off. The particular problem with student loan debt is that it’s underestimated. It sets you up for a lifetime of indebtedness. As to parents co-signing the loans, they’re doing it for the best of reasons, though it’s actually putting both themselves and their children into harms way.

    So much of what’s wrong is governed by cultural norms, the “everybody’s doing it” argument. My thinking at this later stage of my life is that if everybody’s doing it, that’s the sure sign not to participate. Complacency runs with crowds. It’s just stunning that with all of the education and information that we have today, we’re more of a me-too/herd society than ever. I think we’ve seen the death of independent thought, at least collectively. But these discussions give me hope that at least some of us who still dare to think differently.

  22. LOL

    That has always been my mantra. If the herd or mainstream is doing it then it has to be wrong.
    Bitcoin is a prefect example. Once then mainstream starts talking about it is past already.
    I knew about blockchain technology four years ago. I just could not get a handle on how to buy bitcoin or use it. So I stayed away. Now everybody and there brother is talking about it. Selling gold or stocks to buy it. It’s over. It’s a herd mentality. That’s a bubble waiting to explode.

    The technology is good and will become mainstream as far as payments are processed.

    Anyway, I’m getting off topic. Sorry.

  23. Kevin, I couldn’t agree more. We downsized from a “big house in the city” to our “smaller cabin in the mountains”, and used the equity to eliminate our mortgage debt. I can’t imagine facing retirement with the hangover of a materialistic life strung around your neck. It’s no way to swim. If you can’t get rid of it, you probably should consider not retiring until you do.

  24. That’s and excellent point Fritz. If you’re carrying debt you probably shouldn’t retire. Also, I think we’re going to see a prolonged wave of down-sizing on homes in the near future, much more pronounced than anyone thinks right now. There’s a lot of pent up equity in housing that could be better used as additional retirement savings.

  25. I totally agree with Kevin about housing costs. I purchased a very modest home in 1992 with the thought of upgrading later. Now, I’m still in that home at 56 years old. I’d never be able to move and have any hopes of retiring. It’s a better house than my parents ever had, but they had zero debt and a lot of savings. If it worked for them, it ought to work for me. Man, has life’s realities slapped me around a lot. Money in the bank is the only “Jones” I try to keep up with these days.

  26. Hi Bryan – I LOVE this…”Money in the bank is the only ?Jones? I try to keep up with these days.” I’ve known so many people who adopted the savings habit early in life, and even though they never made a lot of money, they live well to the very end. I think it’s the combination of 1) always being able to live on less than they earn, 2) not being a slave to a lifestyle, 3) not being dragged down by debt, 4) always having complete control over their cash flow, and 5) being totally liquid no matter what. #5 makes you feel rich even when it isn’t obvious by surface factors, not the least of which because life is a lot less stressful.

    All the many wealth accumulation strategies aside, that’s really the essence of financial independence. You really don’t need a lot of money, you just need to be in control of the money you have. It involves sacrifices to be sure, but the payoff is obvious.

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