PANEL TWO: DEBT MANAGEMENT AND BUDGETING
01.Core Concepts
ANALYZING ALTERNATIVES FOR DEBT MANAGEMENT (2 of 2) • Mortgage debt may not be the only debt individuals aged 65 and older have. • Credit cards are considered “bad debt” • May indicate the individual is living beyond their budget • Ideally paid off before entering the income and distribution phase PANEL TWO: DEBT MANAGEMENT AND BUDGETING THE RETIREMENT SPENDING PLAN (BUDGET) (1 of 2) • Income planning can shift from wage replacement ratio to detailed spending plan as retirement draws near. • Also knows as the bottom-up or budgeting approach • Planning for expenses • Budgeting approach requires a detailed look at current spending. • Tracking spending over the course of several years before retirement can help plan long-term spending trends • Look for spending that is not annual, i.e. a vacation every three years • Analyze spending for future increases or decreases (or remains the same) • For example, clothing budget may decrease during retirement, while medical budget may increase.