AICCCA Warns - Don't Try to Retire Until You Retire Your Debt
Fairfax, VA - March 24, 2006 — Consumer debt continues to rise in America and enjoying our retirement years may be in jeopardy if the trend continues. Instead of increasing debt, Americans need to begin living below their means and planning for their financial futures.
"In our current culture of, 'buy now, pay later,' it is not a big surprise that, 'save now, spend later,' leaves many of us saying, 'no thanks,'" said David Jones, president, Association of Independent Consumer Credit Counseling Agencies. "Not saving and extending incomes with credit is hurting us both in the present with debt loads that are crushing many American families, and it will again in the future when those families want or need to retire without adequate funds."
Only 49.7 percent of American families had a retirement account of any kind in 2004, reports the Federal Reserve Board's Survey of Consumer Finances. Those already in retirement live on low incomes; the median income of today's retirees is $24,400. In addition, the instances of debt following persons into retirement are on the rise. Forty percent of households headed by someone 75 or older had some sort of debt in 2004.
AICCCA offers the following tips to start and stick to a retirement savings program:
Live below your means and stop extending income with credit. Rather than being forced to change your lifestyle dramatically because you don't have enough retirement savings come retirement time, change your lifestyle somewhat now. Prepare a better financial future for yourself by paying down unsecured debt and not creating any more.
Fully contribute to any employer sponsored retirement plans. Often employers will match funds up to a certain point for employee contributions. Social Security alone will likely not cover the lifestyle you would want in retirement, so the additional income needed will have to be saved by you.
Do not borrow from your retirement fund. Even though you will pay yourself interest if you borrow from your retirement savings, you can never make up the amount your account would have grown by if the funds had remained intact.
Work towards paying off your mortgage. Reverse mortgages are one way to increase your monthly income in retirement should you need additional funds. However, to qualify for a reverse mortgages your home must be without any other mortgage.
Founded in 1993, Association of Independent Consumer Credit Counseling Agencies (AICCCA) is a national membership organization, established to promote quality and consistent delivery of credit counseling services. AICCCA and its members are focused on improved creditor relations, efficient processes and advanced technology to best serve clients and creditors. AICCCA members are independent nonprofit agencies that advocate for debtors, counsel millions of consumers annually nationwide and provide debt management services to consumers with excessive unsecured debt. For more information or to contact an AICCCA member office call (800) 450-1794 or visit www.aiccca.org.
