How to Avoid Short-Term Loans in Retirement

Short term lending is an expensive way to borrow money. The APR interest rates charged by payday loan companies can be staggeringly high, which is why it is best to avoid this type of credit if you possibly can.

However the financial pressures of retirement sometimes means that turning to short term credit is the only way to cover all the monthly bills, especially if you get a one off,  unexpected bill. The type of bill you might receive unexpectedly includes boiler breakdown, property damage or having to help out another family member in need of financial help. No one can see into the future of course, but prudent financial planning can help to lessen the chances of you having to take a short-term loan when in retirement.

Following these useful tips will help you to avoid having to term to a payday loan company.

Plan ahead

It makes sense to try and plan your retirement finances well before you retire. Some of the steps you may want to take is reducing your level of personal debt as well as working out how much money you will need to live on. One point you must remember to factor in is inflation, which will lessen the value of your money year on year. For example of you retire with a yearly income of $35,000, after twenty years of retirement that will buy a lot less than it did compared to when you first retired. Thus, you may want to think about how you can escalate your income to keep up with price rises.

Secure the best annuity

Getting the best annuity is also important in making sure you get the highest income. An annuity purchase will apply to those who have been saving into a private employers pension that does not have a guaranteed income (which is known as a DB pension). Not getting the correct advice and not comparing annuity providers could potentially mean you miss out on a huge chunk of income. You must shop around and get several quotes, using sites which can help you get the best rates.

Save, Save and Save again

In short, if you want a decent retirement income, you need to save for it. Many people either start saving too late on in their career and/or don’t save a sufficient amount each month. Difficult as it is to save for the future, it is entirely necessary if you are to have a decent and financially secure retirement. With the recent downturn in the economy, saving for retirement is becoming increasingly difficult because there is huge pressure just to keep up with every day expenses. However, if you can manage to put money aside you will reap the benefits once you have stopped working.

Pay off debts

Not having a regular salary will make servicing debt more of a burden when you are retired. It is for this reason that you should try to pay off as much of your own personal debt before you reach retirement age. Not only will this mean you will have more money as you will not be making any monthly repayments but it will also mean that if you do get an unexpected bill, you will be in a much better position to pay it.