What are your retirement plans? I am sure clearing your debt is not on your bucket list but it should be. Credit card debt, caring for elderly parents, repaying loans, and mortgages can have a major impact on your retirement planning. While no one makes a conscious choice to carry debt, big and small obligations often leave no choice.

Whether you are nearing the golden years of your life or you’re already retired, here are 7 practical ways to deal with debt and get some relief in retirement:

1. Create a Budget Keeping Debt Clearance a Priority

A sound debt-repayment plan starts with a budget. You can start by taking stock of your current expenditures along with your income sources like social security, pension funds, and retirement reserve. Apart from this, you should also make a note of all your debts along with the monthly payments and interest rates so you can prioritize your repayments. According to expert financial advisors, you should start by paying off debt that is unsecured and has the highest interest rate, first.

2. Consult an Experienced Advisor for Retirement Advice

A certified financial advisor can guide you through retirement planning and debt management. Seeking expert advice will not only help you set up a sound retirement spending plan that lets you dig out of your debt but also enable you to save at the same time.

3. Clear Your High-Interest Debts First

This is a great option if you are dealing with mortgage debt because if you compare the rate of interest on your mortgage with the interest you receive on CDs or savings account, paying off debt would make more sense than keeping money in the bank. Just don’t tap your retirement reserve for this because then, the tax you owe will nullify the mortgage savings you make. However, this route is not for you if you are a retiree having a low cash reserve and other high-interest debts.

4. Consider Refinancing Your Mortgage

If you are fortunate to have enough equity to refinance your mortgage then, take the chance, pull out the cash, invest it and try to live off your investments!  Try and avoid going to a mortgage relief firm as certain debt settlement plans can leave you paying much more than what owed originally. But, it at all you do, be wary of their interest rates as they tend to spike later.

5. Claim a Reverse Mortgage

Despite high fees and interest rates, reverse mortgages still remain an attractive option because retirees have the advantage of not making interest payments even as you continue to live in the house. However, you cannot escape insurance premiums and tax. 

6. Capitalize on the Benefits of Filing Bankruptcy

According to chapter 7, bankruptcy liquidation does not leave any impact on retirement accounts or home equity or social security benefits. Also, retirement accounts remain safe up to more than a million. Managing debt in retirement through bankruptcy makes all the more sense for baby boomers because they don’t have much scope to boost their income retirement income in the later years. However, before you file bankruptcy be sure to consult a certified financial professional to understand all the implications it may have on your retirement planning.

7. Cut Back on Expenses to Create a Lasting Retirement Reserve

When it comes to managing debt in retirement, there is very less room to live a lavish life unless you are bringing some big bucks to the table. This does not mean that you have to live a frugal lifestyle; it simply means you need to prioritize paying off debt and spend from what remains. This may require you to give up on your extravagant lifestyle but you can definitely create a reserve for little pleasures every month so that you stay motivated.