Striving to be debt-free by age 45
How long before you are debt-free? While everyone's situation is different and it may be hard to do, most people should strive to be debt-free by age 45 according to Kevin O'Leary, an investor on “Shark Tank” and personal finance author. “It's at this age that you enter the last half of your career and should therefore ramp up your retirement savings in order to ensure a comfortable life in your elderly years,” said O'Leary. Of course, this is not possible for everyone and there are other factors that go into managing your finances.
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No doubt following O'Leary's advice could certainly put you in a stronger position to retire buy your mid-60s or earlier however, the choice to pay off debt isn't always an easy one. When it comes to mortgages and car loans, that debt may be alright to keep depending upon the situation. “If your debt is costing you less than you expect to make in the stock market (based on your portfolio's asset allocation), a financial advisor may advise you that it's ok to make lower payments on debt and have more to invest in your retirement fund,” notes O'Leary. However, that decision may seem sound now, take into consideration what it would be like to still make mortgage payments after you retire.
Red pencil circle around 5 years retirement text — early retirement concept
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The Bottom Line
Paying off debt is personal and is weighted heavily on multiple factors. The first step is to determine how much debt you have and calculate how long it will take to pay it off.
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