How to make sure you retire debt-free



Take these steps to ensure you will be free to enjoy your retirement in the black.

Retirement is supposed to be a period of ease, so entering this stage while you still have debts to pay off is a scary prospect. But there are some steps you can take to improve your lifestyle. The tips below should help.

= Get a pension forecast =

The rules surrounding the state pension are changing, but you can still get a pension statement showing what you are likely to receive provided that you are more than four months away from state pension age. You can order a statement at, or contact the Pension Service on 08456 060265 (textphone 0800 731 7339).

You should also be able to get a statement from your occupational pension scheme. Unless you have a final salary pension, you may well need to buy an annuity with your pension pot. You can find out roughly how much your pension pot will buy you by using an online annuity calculator, such as the one at .

= Save (Milan: SAVE.MI - news) more =

If you aren't happy with your forecast and you still have a few years to go before retirement, see if you can put more away. If you belong to a final salary scheme, be aware that public sector schemes allow additional contributions.

Otherwise you could consider a personal pension such as a Sipp (self-invested personal pension), which offers more flexibility. You must ensure that your contributions, combined with the value of accruals into your final salary scheme, do not exceed £50,000 a year, the current limit for pension contributions.

= Plan your strategy =

If your future income isn't looking as rosy as you would like, now is the time to think about an exit strategy from work that is less of a cliff edge than a total loss of income at 65. Be realistic about whether you will be able to work in your industry and, if not, start thinking of other skills you could use to generate an income.

= Deal with debt now =

If you are approaching retirement and still have credit card debts outstanding, deal with them now. One option is to apply for an interest-free credit card, which will allow you to pay nothing on your debt for a set period of time, in exchange for a balance transfer fee, which is usually a set percentage of the debt that you are transferring. You can then make plans to pay off the debt during the interest-free period.

At present you can transfer your cash to a Barclaycard Platinum card for two years for a balance transfer fee of 3.2pc.

A longer-term solution is to shift to a low-rate credit card, which will give you a low interest rate for life, such as the low-rate credit card from Sainsbury (LSE: SBRY.L - news) 's Bank with an interest rate of 6.9pc and Barclaycard's Platinum Simplicity at 7.9pc.

= Take the bull by the horns =

If you have a few years to go until retirement and still haven't repaid your mortgage, you might want to switch to a repayment mortgage now. Age restrictions on new mortgages mean you may struggle to remortgage at the end of the term, even on a repayment basis.

One way of dealing with this is to downsize assuming you have enough money left to pay for a smaller home after selling, fees and charges. You could also consider equity release, which releases cash from your home while you live in it. But make sure you understand the charges and go with a provider that belongs to the Equity Release Council.

= Get advice and shop around =

Buying an annuity is usually a "once only" decision, yet many people rely on their pension provider's "default" option when they could have got more elsewhere.

= Prioritise your health =

If you aren't well, you can't maximise your earning power in later years. Get a health check as you approach retirement. However, if you have ongoing problems you may well get a better annuity income.

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