hi and questions
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I'm almost 52 and can retire with a defined benefit pension of $25,000/yr, fixed. The state covers retiree medical premiums if one's single. I rent an apartment. On the downside, I have a large amount of credit card debt. I can downsize to the point of carrying the debt after retiring, repaying it more slowly than as a working stiff. Should I hold off retiring until the debt's settled, or take the leap?
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No debt when you retire! Especially no credit card debt, which is high interest and is not forgiven in bankruptcy. Pay it off ASAP.
If we have '70s-'80s inflation, that $25k fixed income will be the equivalent of $13k in a decade. Are you really sure you can handle living on that low of an income?
Less drastic scenario is this past decade's inflation... can you handle living on an income that's the equivalent of $20k?
In other words, what measures are you taking to protect yourself from inflation? (And I hope the answer is something other than social security...)
If we have '70s-'80s inflation, that $25k fixed income will be the equivalent of $13k in a decade. Are you really sure you can handle living on that low of an income?
Less drastic scenario is this past decade's inflation... can you handle living on an income that's the equivalent of $20k?
In other words, what measures are you taking to protect yourself from inflation? (And I hope the answer is something other than social security...)
I agree with George entirely, not only should you not have any debt, you should have decent savings before retiring.
Average gross income in US a few years ago was about 50k/year. Where I am (Northern California), 50k/year is just getting by, and that's not factoring in inflation.
52 just before retirement sounds about perfect for ERE IMHO.
Average gross income in US a few years ago was about 50k/year. Where I am (Northern California), 50k/year is just getting by, and that's not factoring in inflation.
52 just before retirement sounds about perfect for ERE IMHO.
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Credit card debt is usually discharged in bankruptcy. Exceptions are basically cases of fraud. For example, if you use your credit card heavily just before filing for Chapter 7. Chapter 13 may be a better choice in such a case, but you probably face repaying some credit card debt in the repayment plan. GOO may be confusing with student loans.
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@George: Can you show me where in that act it says cc debt can't be discharged in bankruptcy? I glanced briefly at the law itself (http://www.gpo.gov/fdsys/pkg/BILLS-111h ... 627enr.pdf) but, man, life is too short to read 32 pages of legislation.
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http://thacklaw.com/40-credit-card-bank ... ection-act
I thought it was part of the CARD act, but it looks like it was earlier legislation.
I thought it was part of the CARD act, but it looks like it was earlier legislation.
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CC debt is dischargable, but you have to go with Chapter 7, not Chapter 13. Here's an explanation of the basic differences: http://credit.about.com/od/debtmanageme ... ytypes.htm
You really need to consult a lawyer on that sort of stuff.
But I agree that that bad boy needs to be paid off. Another option would be to retire from that job and take a different one, assuming you are allowed to take the pension at the same time. This is a common strategy for military people and police, but others use it too.
You really need to consult a lawyer on that sort of stuff.
But I agree that that bad boy needs to be paid off. Another option would be to retire from that job and take a different one, assuming you are allowed to take the pension at the same time. This is a common strategy for military people and police, but others use it too.
I agree with everyone else. You have to be debt free and have at least some savings to even consider retiring with that pension. In all honesty, the debt you are carrying proves you don't live a $20k a year lifestyle, so no proof you can live like that in retirement. Don't despair, you can make significant changes to both debt and savings in a few short years if you put effort into it.
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-GOO - I learned something about credit card debt. Thanks for the info. My relative ignorance in this arena is the price to pay for never carrying any credit card debt. Without carrying a CC balance, you don't really have to think about what happens to it in bankruptcy.
I agree with Chad. The credit card debt not only shows that you are not ready for ERE, but more importantly, your current lifestyle is not compatible with ERE. All is not lost, though. Many journals here show how quickly you can turn that around. All it takes is willingness and motivation.
I agree with Chad. The credit card debt not only shows that you are not ready for ERE, but more importantly, your current lifestyle is not compatible with ERE. All is not lost, though. Many journals here show how quickly you can turn that around. All it takes is willingness and motivation.
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Yes, I agree - get rid of the debt!
How much do you owe? And what is your income now?
Also - what is your motivation to retire now? If you are sick of your current job, could you draw the pension and work at another, new, less stressful job?
Will you also collect Social Security when the time comes? Or is this pension the only source?
How much do you owe? And what is your income now?
Also - what is your motivation to retire now? If you are sick of your current job, could you draw the pension and work at another, new, less stressful job?
Will you also collect Social Security when the time comes? Or is this pension the only source?
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I guess I'll be like the 10th to say no way on retiring with CC debt, unless you have truly extraordinary circumstances. Hating your job definitely wouldn't count.
More than that, what I worry about for you is your financial plan to now has led you to having CC debt. Which means, your plan sucked aka "normal".
To retire happily on $25k you need to be able to do the things you need & want to do for less so you have some margin in your life. If you have a couple of years living happily consuming less than your retirement income, then I think you're ready.
More than that, what I worry about for you is your financial plan to now has led you to having CC debt. Which means, your plan sucked aka "normal".
To retire happily on $25k you need to be able to do the things you need & want to do for less so you have some margin in your life. If you have a couple of years living happily consuming less than your retirement income, then I think you're ready.
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