How many more years until you finally say goodbye to that lovely boss of yours so you can finally spend your golden days relaxing in a hammock by the beach somewhere?

For some, the retirement dream is exciting, but for others, the prospect is not that bright, especially for those who are still in deep debt.

Older Australians increasingly are retiring with debt and are carrying a greater amount of debt than ever before.

According to research published by REST Industry Super, about 46% of mature-age Australians expect to retire with a debt of which 25% anticipate credit card debt, 21% expect to retire with a mortgage and about 12% with unpaid bills.

But all hope is not lost because there are actionable steps that you can try to retire without debt.

How to retire debt-free? Let us count the ways

1. Crunch the numbers

You can’t manage what you don’t measure, so you need to work out all your debts and get the total.

Make a list of how much you earn and compare it to your debt and expenses so you can consider where you can cut back.

Once you can see the whole picture, start by organising your finances so you can pay back as much as you can.

Pay your debts on time to avoid incurring extra charges and consider paying the total amount of your credit card bills instead of paying the minimum.

Also, try to look at whether you can afford to make extra repayments so you can pay the loan faster.

2. Stick to your pre-retirement budget

The bulk of your budget might be dedicated to living costs such as food, bills, and health care.

However, you also need to account for your recreation and social life expenses.

Pursuing hobbies (ideally not expensive ones) and maintaining your circle of friends can help your mental health especially when you retire.

A workable budget can help you manage your pre-retirement finances so you can be better off once you stop working.

You can use MoneySmart’s Budget Planner to work out where your money is going.

3. Map out your retirement income

Your retirement find will likely come from different sources such as the following:

Superannuation

You may begin accessing your super once you are on your preservation age (between 55 and 60 years old) depending on your birthday.

Because your super could form a significant percentage of your retirement fund, it is crucial that you are aware of your super balance.

Also try to look at different investment options within your super to check if you can potentially generate higher returns. Just bear in mind that it is usually better to take a conservative position as you get older.

Age Pension

Depending on your income, assets, and personal circumstances, you can be eligible for part or full age pension from age 65 to 67 onwards.

Inheritance, Investments, Savings

Proceeds from your family’s estate or inheritance can help you in retirement. Also, you may consider selling or use an income that you are generating from stocks or investments. You can also tap into your personal savings or term deposit to fund your retirement.

4. Consider delaying retirement

A retirement think thank believes that staying in the workforce for at least six years can add more money to your superannuation.

The Rainmaker report demonstrates the effects of compounding investment returns when a pre-retiree regularly tops up his retirement savings.

For example, a 64 year old earning at least $150,000 per year with $1 million in a retirement fund, may double their superannuation savings by age 70 if they make the maximum concessional contribution of $27,500 per year for the next six years.

This is possible if money is invested in a super fund with a conservative growth (at least 10% p.a.).

5. Consolidate your debt through a Reverse Mortgage

If you’re over 60 years of age and own your own home, it’s possible to pay out your debts with a Reverse Mortgage loan.

If you have amassed debt that you can non longer afford to service, a home senior’s home equity loan may be the answer to improve your financial situation.

Reverse Mortgage interest rates are typically lower than that of high-interest personal loans or credit cards.

If you are an individual who is asset rich and cash poor with a limited income, consolidating your debt and refinancing with a Reverse Mortgage may substantially improve your quality of life.

The accrued interest is ‘capitalised’ and charged back to the loan account each month.

Seek help from the experts

Call the National Debt Helpline on 1800 007 007 for free and confidential advice from professional financial counsellors. The helpline is open from 9:30 am to 4:30 pm, Monday to Friday.

If you want to explore a Reverse Mortgage for debt consolidation, you may schedule a meeting with a mortgage advisor from Seniors First. Just call 1300 745 745 or CLICK HERE to check your eligibility.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before you make any decision.