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Ideally, we would all like to retire without a cent of debt. In reality, few of us probably will. Large loan balances may remain with many of us into our “second acts.”
The TransAmerica Center for Retirement Studies says that 40% of retirees rank cutting debt as a financial priority – but not necessarily as their top priority. While reducing debt is a great financial goal, it is hardly the only goal within an overall retirement strategy.
An effort to erase debt for retirement should not come at great cost to a retirement strategy’s other important financial objectives – such as adhering to an accepted and long-followed investment approach, making ongoing contributions to retirement accounts, or managing income withdrawals and linked income taxes. Some debts may be worth carrying into retirement, as they could be necessary steps on the way to positive financial outcomes. All nonrecurring debt needs to be seen in the context of a larger financial picture.3