The Importance Of Paying Off Your Credit Cards Before Retirement

For most Americans, the idea of retirement is a time to relax, kick back, and enjoy the fruits of their labor. But to truly enjoy retirement, it’s important to be proactive about your finances—and according to the financial advisors at Symple Lending that includes paying off your credit cards. Here’s why you should make paying off your credit cards a priority before you retire.

Retirement is expensive

Although retirement may seem like a time to take it easy, the reality is that it can be quite expensive. Between travel, hobbies, and health care costs, like the couple in this New York Times article, retirees often spend more money than they did when they were working. And if you have credit card debt hanging over your head, those expenses can quickly become unmanageable.

Credit card debt can prevent you from accessing your retirement savings

If you have credit card debt when you retire, you may be tempted to dip into your retirement savings to pay it off. But that’s not a good idea for two reasons. First, if you withdraw money from a 401(k) or IRA before age 59½, you’ll likely be subject to a 10% early withdrawal penalty. Second, every time you withdraw money from your retirement account, you reduce the overall balance—which means you’ll have less money to live on in retirement.

Credit card debt can negatively impact your credit score.

Your credit score is important—not just for getting approved for new lines of credit, but also for things like insurance rates and rental agreements. And if you have high levels of credit card debt when you retire, your credit score will likely suffer as a result. That’s why it’s so important to pay off your credit cards before you retire—so you can protect your credit score and enjoy a comfortable retirement free from financial stressors.

According to Experian, your credit score might not change when you retire, but your ability to borrow money could decrease slightly. This is because you will have less income when you retire. You will probably get Social Security and money from your retirement savings, which is less than what you made when you worked.

Lenders will often request to see evidence of a consistent income stream when weighing loan applications. One of the primary concerns with having a smaller income is that it can lead to an increased debt-to-income (DTI) ratio. The DTI ratio is determined by dividing your monthly expenses by your monthly income.


Paying off your credit cards before retirement is crucial to maintaining a good standard of living during those golden years. With expensive medical bills and other common costs of retirees, having debt hanging over your head can quickly become unmanageable—and could even cause you to dip into your hard-earned retirement savings account. So make paying off your credit cards a priority and enjoy a worry-free retirement!

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