8 Signs You’re Not Ready to Retire (at Least Not Yet)

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2. High level of debt

“Large amounts of debt will severely strain your savings once you retire,” says David Walters, a certified financial planner and portfolio manager with Palisades Hudson Financial Group’s Portland, Ore., office. “If you can, reduce or eliminate credit card payments and car loans. Depending on your situation, paying off your mortgage or downsizing may also help in the long run,” he says.

Even if getting rid of debt might mean working harder than you’d want to, we assure you it’s worth it. Think about it… Paying down debt before retirement means less monthly payments, so you’ll have more money to enjoy your retirement.

This decision is quite difficult: Should I put those extra money in my retirement account or should I pay down debt? Here’s something that could help you: For any loan with an interest rate equal to or higher than what you’re likely to earn in the market—let’s say, 6-8 percent—you’ll get the best return, and actually a guaranteed one at that, by paying off your debt.

Also, if it’s a hard choice between paying 3 percent in mortgage interest (which may be tax-deductible if you itemize) and actually saving more for your retirement, the latter is probably the smarter option for you, unless you have a poor track record with investing.

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