Owing money just before and during retirement is more common than people may think. In fact, 2016 data showed that 70 percent of U.S. households headed by people between 65 and 74 years of age were holding some amount of debt. Even for households headed by individuals 75 and over, 50 percent held debt. Retirees in Connecticut have some unique challenges when it comes to debt management as they typically have a fixed income.
One of the most common types of debt that many Americans end up dealing with in retirement is a mortgage. One of the challenges of mortgage repayment when retired is that typically, refinancing a mortgage is less of an option without employment income. Additionally, employment income can help support bill payments including mortgages.
Financial experts say it might be better to work a few extra years to bolster savings, especially if mortgage payments remain. Refinancing a mortgage, consolidating debt and opening a home equity line of credit are all things to consider doing before leaving work. While digging the debt hole deeper could be dangerous for some, others may get added security from extra funds in case of an emergency.
One of the dangers of taking out a home equity line of credit is that it puts individuals at increased risk of losing their home if they struggle with debt management. Those who are concerned about defaulting on such a loan may wish to consider other options such as bankruptcy, especially if they are on a fixed income. Retirees considering bankruptcy in Connecticut should speak with a lawyer to understand their options.