Retirement is a big financial undertaking that requires years of planning and investing. Sometimes people are so busy investing for their retirement that they forget a few financial basics. It is the financial basics that can sometimes teach us the more important lessons. Let’s review a few of these retirement basics so you will be more prepared to retire the right way….in good financial shape.
Important Retirement Basics
#1) Know Your Credit Score
Credit scores are rarely thought about when some one is thinking about their retirement. However, your credit score can be like your crystal ball; it can tell you whether you are financially ready to retire. For example, your credit score will tell you if you have too much debt or if you need to improve the timeliness of your payments to free up more cash.
To know where you stand, you should order your credit score before you retire. You can order a free credit score once a year from each of the 3 national credit reporting agencies.
Improving your credit score starts with having a base score to work with. Know your credit score; order your free credit score as soon as you can.
Your credit score is your financial history; your financial history can sometimes predict your financial future. So you should check out your financial future before you start that next phase of your life.
#2) Work On Improving Your Credit Score
How To Improve Credit Score Before Retirement
Work on decreasing your debt. Large amounts of debt will show up on your credit report as a low credit score. If your credit score is between 350 and 750, you may be carrying too much debt to be able to afford retirement.
Your Payment History
If your credit score is low it could be due to when you pay your bills late. If you pay your credit cards, loan payments and utility bills late you may not be ready to retire. Late payments show up on your credit report as a low credit score. With a low credit score you will pay more on everything you buy because you will be charged the highest interest rates.
Do you have enough money invested in your retirement accounts to retire and pay more for everything? When you are paying the highest interest rates because of a low credit score, your cash flow will be depleted more quickly.
It is in your best financial interests to work on improving your credit score before you retire.