How Credit Scores Can Impact Retirement Plans
What you need to know in order to plan for the future
According to a June 2011 article on FoxBusiness.com, retirees' long credit histories are probably doing them many favors in terms of their credit scores when they retire. But no matter how long a credit history is, if it isn't a good history, then it can negatively impact your retirement. Here are some things to consider:
Where do you want to live after retirement?
If you have dreams of selling your house and buying a small, waterfront condo at retirement, then you need to make sure that you have a good credit score or you may find that you require a loan with a very high interest rate, unless your condo costs no more than what you make when selling your existing home.
But even if you plan to live in an apartment, your credit rating could stand between you and your dreams of living in a particular location, because many landlords are much more likely to verify credit scores before giving new tenants a lease.
How do you want to travel?
If you plan on relying on public transportation after you retire, then your credit score won't be much of a factor. But if you plan to drive your car, you're going to need car insurance. Because many auto insurance companies issue premiums based partially on your credit score, you could find that keeping your car is no longer in your budget if you don't maintain a positive score through retirement.
Will you need credit?
While many retirees avoid the use of credit after retirement, some still need it for big things like auto loans and mortgages or for small things like vacations and discretionary spending. But a retiree with a low credit score will spend more of his or her limited retirement funds on interest than will a retiree with a high credit score.
It's impossible to know how long your retirement savings need to last and what unanticipated expenses will crop up to deplete them. That's why retaining a good credit score before and during retirement is just as important to your retirement plan as saving money is. Give us a call or stop by to find out how we can help you create a successful financial plan for retirement.