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The biggest threat to your retirement savings? Credit card debt

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Working Americans rank credit card debt as one of the top challenges to their ability to save for retirement.

It was discovered in a survey conducted over the summer by Goldman Sachs with over 1,200 people.

Melinda Opperman, president and director of relationships for the nonprofit Credit.org, was not surprised by the study.

“Every dollar that someone has to put out to pay off debt is a dollar that they can’t set aside for retirement,” she says.

CNBC spoke to experts about how debtors can still try to build a nest.

It’s hard to save and pay off debt. Should I prioritize?

How can I do both at the same time?

Since credit card interest rates are so high, experts say you should at least pay more than your mandatory obligations.

“Minimum payment by credit card is almost always a bad idea,” says Rossman. “It’s really hard to build any kind of asset if you have to pay a lot of interest every month.”

However, at the same time, you want to save some money for retirement.

“It’s very hard for people to change their habits, so never stop saving altogether,” says Opperman.

Even if you only get a $20 deduction for each pay period, “that can add up and you probably won’t miss it out of your paycheck,” says Carolyn McClanahan, a certified financial planner and director of financial planning at Life Planning Partners in Jacksonville, Florida.

“Thanks to the magic of compound interest, just saving a little regularly can add tons of money to your future nest,” says McClanahan.

If your employer offers a 401(k) match, you should try to contribute enough to receive the full benefits, says Rossman.

“It’s a 100% guaranteed return – it’s free money,” says Rossman.

For more money to save, says Rossman, you can sign up for a 0% balance transfer credit card. These cards, for a fee, give you up to 21 months at no charge.

“You can pay off your debt without being charged high interest rates and still earn some savings in retirement,” he says.

Without credit card interest payments, you can even increase the percentage you contribute to your 401(k) retirement savings account or other retirement account.

Should retirement savings be used to pay off credit card debt?

https://www.cnbc.com/2021/12/17/the-biggest-threat-to-your-retirement-savings-credit-card-debt-.html The biggest threat to your retirement savings? Credit card debt

Emma James

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