The Massive Threat to Your Retirement No One Talks About
The Debt Trap That Could Derail Your Retirement
When most people think about preparing for retirement, they focus on income, savings, and investments. But there's another factor that often flies under the radar yet has enormous consequences: debt.
After 34 years of reviewing thousands of client financials, I’ve observed that the strongest predictor of a secure retirement isn't always the size of your nest egg—it's the amount of debt you carry. Many enter retirement with mortgages, car loans, or credit card balances that slowly erode their financial stability.
We aren’t aware of how energy sapping debt can be in retirement. Once you are on a “fixed income” it is shocking how significant a mortgage payment, or even a car payment can be to your financial situation.
One couple I met with many years ago made a series of errors in their debt. They took out a home equity (HELOC) loan to pay the bills – things like a vacation or a vehicle. And because interest rates were falling, every couple of years they would refinance their home into a new 30-year mortgage.
As you can already guess, they rolled that HELOC into the mortgage every single time. By the time retirement rolled around, they had a mortgage that was about 80% of their home value and a small pension, nest egg and Social Security to fall back on. In the end, they were forced to downsize in order to retire.
They Are NOT Your Friend!
Remember that lenders are not our friends. They are companies that want to extract as much money as possible from their customers for as long as possible.
Think about the worst strategies we employ with debt. When I first started my business, I also purchased a home. That left me very short of cash. Yet I needed a new computer for work. I called my credit card company asking to extend me a bigger line of credit. After much hemming and hawing (which was an act for my benefit) they granted the higher line of credit.
What did I do? I thanked them. I thanked them for charging me 17% on a bigger balance on my credit card. (Note: I haven’t carried a credit card balance in 30 years.)
The system is so upside down that we thank lenders for taking more of our money. That’s not a system you want to be involved in.
The schemes of lenders don’t stop there. Remember when car loans were 36 months? Then they were 48 months. Then 60 months. Now car loans are 72 and 84 months. Seven years to pay off a car?
We’re also starting to see “Zero Percent” credit cards again. This isn’t a benefit. What credit card companies know is that when you pay off a card with a temporary zero percent card, you are very likely to run that old card back up to the previous balance within a short period of time. After a year or two, the zero percent offer runs out and you are now paying interest on double the balance. They are not here to help you!
The good news? It's not too late. It is utterly shocking how quickly debt can disappear when you earnestly begin to pay it down. While it may take a few years, being debt-free or nearly debt-free can provide more freedom in retirement – something we all desire.
Have questions? Jump down to the form at the bottom of this page and we will reach out. And for a more detailed discussion of debt and the problems, check out our latest podcast at
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