By: Richard Hitchcock, CFP®

(This article is mainly addressed to those in the middle years of their life. What we call the GROW phase.)

It’s not uncommon for people in their middle age years to still have debt carried over from college and from their early years of beginning a family. Priorities of life left little money to aggressively tackle these debts. Now, as college costs are slowing down, and as midlife income is picking up, it is a good time to re-focus on paying them off.

The reality is you don’t want to be dealing with mounds of debt, particularly bad debt, as you head into retirement. We define bad debt as any debt carrying excessive interest rates such as credit cards, debt that is used to finance depreciating assets such as cars, and any personal loans that you’ve been carrying around for a while.

A mortgage on your primary house is not necessarily bad debt, although many retirees who own their homes free and clear will tell you that living without a mortgage is financially liberating. The issue of the tax benefits associated with a mortgage usually comes up when people are faced with the decision of paying that loan off ahead of schedule.  But with the larger standard deduction offered to all individuals and couples, recently enacted by the Trump administration, this will not be as important. And, if you can enter retirement without a big mortgage payment, you can most likely live on a lot less.

The process for paying off debt while continuing to fund retirement accounts involves rethinking your personal expenditures. Many people have found it helpful to develop a financial plan which helps them visualize the goal and create a process to get them there. While it certainly is gratifying to go out to eat more often or purchase things for yourself, it also can be gratifying to have a definite goal of being debt free by retirement. And, a financial plan can give you a clear picture of your current debt load and prioritize what you should pay off first.

Use the time you have to position yourself for retirement. You will thank yourself!

About Hitchcock Maddox Financial Partners (HMFP):

HMFP is a comprehensive and collaborative financial planning firm headquartered in Trussville, AL, serving clients and their community since 1999. Collectively, HMFP advisors have provided guidance in the areas of Financial Planning, Investing, Retirement and Insurance for over 35 years. For more information please visit or call 205-201-1401.