The Finance Blogger


When Will You Be Debt Free?

Most people want to be debt free by the time they retire and most aim for this objective, however surveys are increasingly showing that most people are not achieving this aggressive objective nor are they coming even close to meeting it. When Will You Be Debt Free? Retirement with a nice nest egg seems to be a dream that many people are just not achieving.

Respondents to one survey projected they would be debt-free by 55, on average. A key finding of the poll shows that across all age groups, consumers tend to believe they will be debt-free within approximately 10 to 15 years of their current age. The reality is that many will not be debt free even into retirement. The poll found:

  • Consumers aged 18-24 believe they will be debt-free by age 32, on average
  • Consumers aged 25-34 believe they will be debt-free by age 44, on average
  • Consumers aged 35-44 believe they will be debt-free by age 54, on average
  • Consumers aged 45-54 believe they will be debt-free by age 60, on average
  • Consumers aged 55-64 believe they will be debt-free by age 65, on average


What is the Reality for Most People?

Yet the reality is that most people do not achieve this objective for a variety of reasons. If the recession of 2008/09 had not occurred, perhaps the poll would have come out differently and more people would actually be achieving their objectives. Of particular concern are consumers who are in the 55 to 64 group and aiming for debt freedom by age 65. With the meltdown in the markets, companies going out of business and other people losing their jobs, not only are many people finding that they will not be debt free, they have to work much longer than they planned.

The only groups that seem to be having a better time of it than most, are government workers who have put in the years and are retiring with a pension that is as solid as it gets when it comes to pensions. Workers in the private sector have not fared nearly as well. Some have lost their pensions, some have seen the value of their homes decrease dramatically and many more just have not been able to save as much as they had hoped.

While it is unfair that government workers appear to be doing better than their counterparts in the private sector, the recent events in other countries were governments are cutting wages and benefits is not that far away.  Depending on your age, you may want to plan now for lower wages and benefits to ensure that you manage your debt accordingly. While this seems far fetched, most governments are having significant debt problems and there are only two ways to solve this issue. Allow rampant inflation or cut wages.

When Will You be Debt Free?

Now is the time, regardless of what age you are to begin planning to be debt free. Put a solid plan in place that allows you to achieve a realistic objective of being debt free by the age you aim for. If you do not do this, being debt free will not happen on its own.  Maybe you have to save more than you planned, maybe you have to work longer than you planned, maybe you will have to downsize or maybe you will have to retire a bit later to achieve debt freedom so that you can really save for retirement.

Don’t forget that once you are debt free, the monthly payments you were making on whatever debt, should go straight to your savings plan for retirement. Don’t let up. Develop your debt freedom plan now and then aim for retirement under your terms! Be cautious and assume a ten or fifteen percent wage cut and work from that level. If it does not happen then you will be better off than what you planned.

 

 

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One Response to “When Will You Be Debt Free?”

  1. mary Kay once said from 0-18 you need your parents, from 18-40 you need your looks, from 40 to 60 you need personality and from 60 on you need money. So true, that is why it is important to start saving early for when you turn 60.

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