Do you feel like your drowning in debt? I read some blogs about how to retire early, how to live on $15,000 a year, how to turn a cardboard box into a drool-worthy condo…you get the picture. But the reality is that many of us, from new graduates to those eligible for social security, are just doggy paddling in a sea of debt and financial issues, not exactly drowning, but not on our way to any Olympic gold medals either. The problem isn’t learning to live on less disposable income, it’s paying off the debt we’ve accumulated already. Take a debt snapshot of older Americans and the picture looks bleak, but the debt they’re carrying isn’t what you might expect. 

Recent studies confirm that seniors are headed into retirement carrying higher levels of housing and unsecured debt, and even student loans, threatening their retirement dreams. We’re considered the sandwich generation because we’re helping our children cope with student debt, underemployment, and the challenges of being young parents themselves. At the same time, many of us are helping our parents as they move into assisted living, move in with us, or simply need some financial support to afford medical services while still having enough food in the pantry. That doesn’t leave a lot of time or resources for us to take care of ourselves, and especially to take care of our future selves. And that’s a problem.

A report from the Employment Benefit Research Institute reveals that for those age 75 or older, the percentage with a mortgage or other housing loan was 20% in 2013, up from just 7% in 1992. I know that I’m counting on being mortgage free in retirement. Most of us are going to experience a decrease in earnings once we stop working, and being free from a monthly house payment is one way to absorb that lost income.  

There are some situations that make debt unavoidable, but you can be proactive in managing your debt and working your way towards a debt free retirement. Here are a few good habits to get into:

• Know what you owe. If you don’t this may be a warning sign you have too much debt.
• Power pay your way out of debt. This principle involves listing all your debts and respective interest rates, then paying off the most expensive debts first while making at least minimum payments on everything else. Don’t add new debt in the meantime. Visit www.powerpay.org.
• Find extra money to pay off debt faster. Plug spending leaks, establish a budget, adjust your withholding, add extra income, or liquidate some assets. Use some of that extra money to build your emergency fund.
• Keep your debt-to-income ratio less than 15%. This is your total monthly payments (except mortgage or rent) divided by your after-tax income. If the ratio is between 15% and 25%, use caution. If it’s higher than 25%, seek help.
• Avoid expensive forms of credit. Steer clear of high-cost payday loans, advance fee loans, high-interest debt consolidation, and debt-settlement.

Planning for retirement is a huge responsibility, and trying to do so while struggling with debt can feel overwhelming. There’s no shame in seeing an expert and asking for help. Like just about anything that’s worth doing, it’s going to mean some challenges and hard choices, but at least you’re working for both the best and the most demanding boss for the job…yourself. If you are struggling with debt, it’s time to face it, make a plan, and move forward. Remember, there are no retirement loans…that’s one check only you can write.