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Financial Planning, Retirement Planning

How to Manage Debt as You Approach Retirement

September 5, 2021

Becoming debt-free is a top priority for many Australians, especially for those nearing retirement. 

It’s not unusual for retirees to head into retirement with a mortgage to pay off or other personal debts. 

However, when you’re approaching retirement, you may be wondering how to manage your remaining debts so that you can relax during your golden years and remain financially secure.

Retiring Comfortably

Everyone will retire at some point. You’ve worked hard for decades to save up enough money so that you can finally sit back, relax, and live your best life. 

However, things change when you still have some debt to pay and you’re edging closer to your retirement.

Many retirees enter retirement with debt for many reasons, like a high debt-to-income ratio, health-related concerns, or forced early retirement due to redundancy. Property prices have also skyrocketed, leaving people with no choice but to take on more expensive mortgages that take longer to repay. 

According to a research report by REST Super, 29% of Australians approaching retirement are worried they have too much debt.


Concerningly, the largest source of debt for pre-retirees is actually credit card debt. 

Paying off Debts For Retirement

Although everyone dreams of retiring debt-free, this isn’t always possible. Being debt-free allows you to go on more vacations, indulge in luxury purchases, and reduce overall stress. It also puts less burden on your loved ones if you can’t repay your debt. 

But whether you’re approaching retirement or already in your retirement worried about your debts, a financial planner can help you manage your debts effectively. Everyone deserves to enjoy financial security in retirement. 

At Cambio Group, we want to help more people manage their debts effectively and secure their perfect golden years.

Tips for Paying Off Debts

To pay off your debts, you’ll need to analyse your needs, situation, and know your options. As you near retirement, you’ll also want to understand how much money you need to retire.

If you have access to your superannuation, you may decide to use a super lump sum to pay off debts. Before you make this decision, it’s worth doing a superannuation health check to make sure this won’t affect your retirement in the long run. You’ll have to determine how much super you have, how much you’re willing to use to repay your debt, the tax implications, and how much money will be leftover. 

Another option is to downsize your home if you find that you don’t need all the space anymore. This may mean you can use some of the money to pay your debts and live comfortably in a new home – this means less cleaning too!

Start your Retirement Plan Today!

The prospect of having debt while being retired can be intimidating. However, everything starts with a plan. With a thorough plan, you can leverage different strategies to repay your debt, grow your investments, and ensure you retire without any financial stress.

If you are starting your retirement plan, think about seeking help from a financial advisor to help you include a debt repayment strategy. 

Cambio Group offers financial advice on the Gold Coast, helping clients with their debts, superannuation, investments, and retirement planning. We can help you achieve your financial goals to ensure you retire comfortably. Get in touch with us today to learn more!

Disclaimer: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances. 
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