Tom, a 60-year-old Lancaster resident with a debt of $26,000 and no retirement savings, remains positive for a comfortable retirement at 65. Understanding his dire financial state, he is exploring effective techniques to repay his debt and start saving for retirement.
Tom’s situation is a mirror of many Americans nearing retirement. For some, financial instability has been dictated by job loss, health issues, or poor financial planning. Thus, such individuals require access to helpful resources to secure their future, highlighting the need to address the financial literacy gap and strengthen social support for older adults.
Personal loss and health problems have heightened Tom’s financial problems, kicking him into debt. Despite these challenges, Tom has sought financial advice, initiated a debt repayment plan, and shown resilience with a hope of gaining control over his finances.
Unsettling Federal Reserve data reveals that only 58.1% of the baby boomer generation had a retirement account by the end of 2020.
Tackling debt for secured retirement
Even more worrisome, those aged 55-64 had a median debt balance of $90,000 in 2022. These stark figures suggest an imminent increase in poverty rates among older citizens, pointing towards the urge to promote financial literacy and retirement planning among the younger generations.
Yet, in the face of these issues, Tom carries an optimistic outlook. He and his wife, with a post-tax income of $72,000 per annum, are committed to clearing their debt by October. They have developed a strict plan that includes limiting unnecessary expenses, allotting a monthly amount for debt repayment, and seeking additional income from side jobs.
As part of his income increment strategy, Tom picked up additional work, started a candle-making business, and is considering selling their family home for downsizing. Understanding the gravity of their financial situation, Tom is also exploring investment opportunities and gaining financial literacy.
Lastly, Tom is contemplating ways to boost his retirement savings, such as making maximum contributions to a 401(k) and a Roth IRA. Despite his challenges, Tom remains steadfast in his goal to retire at 65.
