debt free retirement

Debt Free Retirement – Start Early

The earlier in life that you start and implement a plan for a debt free retirement, the better – and the sooner that you’ll get there. Debt is pretty much unavoidable while living through todays modern world. However, the sooner you begin avoiding debt, and the sooner that you shed any debt you must incur, the easier and better for your retirement years. If you’re young, this may seem an eternity away. But trust me, it’s not. Life happens much faster than you think. When you get there and look in the rear view mirror, you’ll say ‘wow’ that was fast…

Today’s economy makes it especially difficult. Especially for those just starting out on their own. The big paycheck isn’t there yet. Rent is expensive. Heck, everything is expensive. Even for the middle-aged who are well into their careers. How in the world can you even think about getting through ‘life’ without debt on your shoulders? It seems nearly impossible. And maybe it is, to an extent. But you can control it.

Living debt free (or getting there for retirement) is a simple concept. Spend less than you earn, and accrue no debts that you can avoid. If you must take on a loan, be smart about it and minimize the burden that you take on.

Pay as you go (from money on hand). Sounds simple, right? So, why are so many people unable to do it and rack up credit card debt? We’ve heard it before… “live within our means,” “develop budgets”. But in the end, most people inevitably find themselves in the hole, trying to dig out. Or giving up on ‘digging out’ altogether. We’ve been trained as a society that debt is okay. The thing is, it’s really not so good – when it comes to personal finances.

Permanent lifestyle changes to become debt free for retirement

To stand a chance at becoming debt free, and a debt free retirement – It may require a lifestyle change. To spend substantially less money than your ‘take home’ pay / income. And, to be committed to live that way. It means living below your means, and seeing it through long enough to get out of the hole, and not going back to your old habits. In order to stay debt free, you need to maintain a debt free lifestyle. Plan for the long-term and make permanent lifestyle changes if you need to. Your retirement years will thank you.

Your reward during retirement

You don’t want debt during your retirement years. Some may say that it’s okay because they have a nice ‘nest egg’ in a 401K or IRA whereby they can easily withdraw equivalent amounts to pay loans (which may be more tax beneficial than withdrawing a lump sum to pay for ‘xyz’ upfront, even during retirement years). However while that may be true for some people, I’m talking about developing a mindset (during your working years) of not counting on that nest egg to enable debt in your retirement years. If you end up with a big nest egg, that’s great! The thing is, that nest egg will be even greater if you don’t have to use it to pay off your acquired debt.

Budget, be honest about your expenses

So, how does the working person plan for a future that involves minimizing debt? “Debt free” is a misnomer, as few people can afford to pay cash for a home or car these days! But you can be smarter about it. Develop a realistic budget. Budget is not a bad word. Take into account your current expenses, your long-term plan, and the development of an emergency fund too. Be honest about your expenses and goals when you make your budget – this needs to be a plan you can follow for years, not for weeks or months. You need to think of a budget as a life plan to reach your goal of a debt free retirement. And don’t buy that McMansion or fancy new car… Your retirement years will thank you later.

Discipline, follow it through for your reward to a debt free retirement

Make it a lifestyle. Living and spending below your means. Not ‘at your means’, but below your means. When you live this way, you will build up cash. Use it to pay off debt. Build a reserve. Your retirement years will thank you, especially if debt free. People might not fail because they had a bad plan; they may fail because they lost sight of the plan, and didn’t have the motivation and discipline to follow it through.

Retrain your thinking and spending

Yes, debt free living is a simple concept, and one not easily executed. Many have spent their entire lives learning to live in debt. The system nearly forces it upon everyone. It needs us in debt. Remember, it will take time and commitment to retrain your spending habits. Refrain from frivolous spending. Don’t lose sight of your future. You will face setbacks, make mistakes, and may wonder “Why did I do this?”. Trust me, your retirement years will thank you.

I know that I’ve written about this simple concept quite a few times here on the blog over the years. Well today I felt like doing it again. Given todays very high inflation and high costs of everything, I am so glad that I’m living a debt free retirement. Almost every time I walk out of the grocery store having paid so much more money than before (as just one example of todays high costs), I can’t help but realize how difficult it must be for many who are retired on fixed incomes with not much money. And if they also have debt, well, it’s that much worse. So do yourself a favor if you’re still in your working career years… Do your best to setup your later years to be debt free. The sooner you get there, the better!

Some of the biggest / impactful money decisions that you might make during your working years may include some of the following:

  • The long term financial impact of buying a house and paying that mortgage. Oh my goodness. This is the biggest decision. How much, or how little to spend… It is SO EASY to be tempted to buy the ‘nicer’ or bigger house – because you can ‘afford it’, and you really want it. But let me tell you, that extra money, the bigger payment, the more interest you pay to the bank for years and years and years – it’s going to set you back further than you may realize over the long run. It is a big deal! And it may also be a big mistake to assume or plan on having an abundance of home equity value years down the road – to justify the extra purchase expense.
  • The same principle goes with buying a vehicle. You may be able to afford a payment that costs an extra hundred or more a month for the nicer car. But that money will stay in your pocket if you don’t…

[ Read: How To Reduce Your Expenses And Debt ]


  1. Your talking to a bunch of old dudes here.
    Early, I lost that option long ago.

    1. To ‘Horse’

      Well, speak for yourself, old dude :=)

      When I write an article, it goes out on the internet – forever, so to speak. If anyone younger than retirement age ever happens to read this (now, or later), perhaps it might help inspire a nugget of reality.

      Otherwise for you ‘old dudes’, you can skip this article ;)

      1. I have well over ten years to retirement and I’m debt free. I started paying off debt about 3 years ago at the start of COVID. It was student loans, my car, credit cards, all the usual stuff and my house. It’s been very difficult and so many sacrifices along the way, but so worth the journey. Ken, never stop telling people to live within their means…we are listening. :)

        1. Congratulations, JLoBerry! Definitely worth the journey.

          I’ve been debt-free for almost a decade now, and it has made things so much easier. I was able to quit a horrible job without having another one lined up. Within two weeks I was making money again, but knowing that I didn’t have any payments and that I had plenty of food and other necessities made taking that step a lot easier. It’s harder and harder to live right now with the money I make; I can’t imagine if I had a house payment and a car payment, too. The stress would really take its toll.

      2. Own your lifestyle , don’t rent it. Been debt free for 8 years now and loving it every payday.

  2. Ken, no matter how many articles written, always sound advice. One budget item we added was paying each (DW and i) an allowance weekly to do with whatever you wish with it, added a feeling of independence to treat yourself to whatever. As time went by any income increases (debt paid off, raises, bonus or tax refund) would be allocated to one financial bucket or multiples and kept cruising along to the long term plan. Typically during February tax program time, for many years, I’ve done income and tax projections for the next calendar year using the tax program inputting the current year to fool it. Comparing actual income and tax to the next year projection I’ve able to be really close to actual. I don’t like to be financially surprised I guess. Anyway, what works for the one may not work for the many, with apologies to Mr. Spock. Time to polish some rifle barrels.

    1. Boiling it down, maximize free cash flow. Free cash equals dollars not needed for debt or living (operating expenses).

    2. Grey, We also did very similar to what you described. Giving yourself and your spouse a “payday” is important I think.

    3. The allowance for a couple was some of the best advice I received when I first got married. I was told that most fights in most marriages were centered around money. Usually one party thinking the other was spending on something frivolous. My wife and I started our marriage with this plan and decades later we have never had a fight about money and very few over any other subject.

  3. Ken, the advice your giving is spot on. Simply stated, you CAN’T make payments on a pension unless you have some investments that pay you every month. Starting to plan for retirement early is also very important. Basically you don’t ever want to accept any payment plan that finishes when you are in your retirement years. DW and I were debt free the last fifteen years before we retired and the freedom and peace of mind is worth the price of planning and living within our means. Plus it gave us the opportunity see if our projected retirement income in real time would cover our living costs before we got there. There were no surprises when retirement began.

  4. I know a LOT of people who went into retirement with a mortgage, and others who took out a reverse mortgage so they could afford to live (and pay for that yearly trip to Tahiti, or the kitchen remodel, or the new truck every year).

    For myself, I know that a loan is the last thing I want to be concerned about when I’m on a fixed income. Personally, I would say that going into retirement without debt is at least equal to the importance of having that nest egg.

  5. Ken
    You could not have picked a better time for this article!
    This sudden banking problem is a potential problem for everyone!
    Banks may call in loans, freeze accounts or both! I am worried about what may happen and the wife and I use all small local banks.
    The one thing that we do not have is debt! A long time ago we decided that one of the things we needed to do was use the time we had to get ourselves debt free before we retired. Our house and truck are paid for and no loans of any type.
    No bank of any type is your friend, they will smile and tell you that you are a valuable customer and turn around and charge you a fee,intrest,late charge all to make money for the bank.
    I don’t know what will happen a day or two from now but knowing that right now I am good,will worry about tomorrow then.

  6. After all those years farming/ranching, debt was always a big worry. I was millions in debt, the payment HAD to be made ON time.

    After 52 yrs, I finally reached debt free in 2016 and you cannot believe the amount of stress that removed, it was a lot. I know only 1 other person in my contacts who is debt free, isn’t that sad? CC are the worst trap.

    One thing my Dad taught me, “Anyone can spend money, very few know HOW to spend money.” And Man-o Man was he right. A lesson I never forgot.

    Being debt free at least gives a chance to make it through the mess.

  7. ‘Retirement’ and ‘Debt’. Those two words don’t go together.

  8. I think careful debt management is imperative. The people that took out 2.5% home loans before the pandemic are sitting pretty compared to those that took 6.5% home loans out on pandemic priced houses of 2021 and 2022.

    If you are careful, debt can work for you instead of being a slave to it.

    Also, don’t forget that you can’t take it with you when you die.

  9. A bit more complicated, from my POV; must view some outflow as investment. I didn’t find my forever farm until 2012. I retired for the last time in 2018. But the amount I mortgaged at the interest rate of the time means that I have a very small, easily manageable monthly payment. In fact, it’s half the monthly income I get from a rental which I own free and clear. If that tenant ever leaves, I’ll double the rent, at least. Given tax deductions available, on balance my properties generate income. So, I don’t consider my mortgage a realizable debt. Nor does the beloved offspring, as I carry enough life insurance to cover all my debts – mortgage, vehicle loans, and credit card. Am planning on paying off some debt to free up more cash for prepping, but that will be an investment too.

  10. Lots of good advice on this timely subject, thanks everyone. I agree that being debt free is the most important choice most can make, although some have pointed out that debt is necessary for business reasons. My little story: About 20 years ago, I was stopped at a red light in my older van when a hummer stopped beside me. My first thought was how to convince my spouse to let me write a check that big. Then I decided that having the money was more fun than having a hummer. I still drive that van, it has over 300,000 miles and runs great.

  11. I had a lot of luck in my career and investments. Plus, I never got married, never had kids and was always a bit of a skinflint. Many years ago I had a beat-up old Ford Escort. I repainted it with Tremclad, using a roller. The valve seals went, so oil would leak into the cylinders. Every time I started it up it would spew out a huge cloud of bluish smoke. One time, after a meeting with my financial advisor, I started up the car to head home. Huge cloud of smoke. My financial advisor’s assistant caught me. Couldn’t believe I was driving such an awful, worn-out piece of crap. People who have money tend not to care so much about having a new car.

    1. Good for you, Wooly bugger! Glad to hear I’m not the only one who painted a vehicle with a paint roller.

    2. Good advice all, being debt free is empowering! Many things once gone are not missed-cable TV, expensive restaurants, and vacations, and who in the hell needs a heated steering wheel?

  12. Ken, considering that this is a prepper blog, I am very surprised at the number of commenters who are making financial plans as if our financial system will continue as it has. It’s almost like listening to Dave Ramsey. Remember, the Federal Reserve has been functioning for 110 years exactly as intended. What is coming is often referred to as a “reset.” Some of the best advice I’ve heard goes something like, “Those who have no debt except their mortgage are in danger of losing everything.” When my dad became disabled at age 40, he lost his farm and all his other properties. After the auctions, he was able to scrape up enough cash to buy an old farmhouse on a few acres. He told me, “It’s amazing how little money you can live on when you have to.” I guess his experience has tainted my view. Most American households have their home as their largest asset, yet 99% of the homes are mortgaged.

    1. To ‘Old Alaskan’,

      “Most American households have their home as their largest asset, yet 99% of the homes are mortgaged.”

      Don’t know about the actual percentage of homes that are mortgaged, but yes, for most people their home is their largest asset. In my opinion, you probably don’t want to go into retirement with a mortgage hanging over your head (if at all possible). The only way to accomplish that is to plan ahead. Way ahead…

      Oh, and yes, TPTB are most definitely planning a Reset. However that’s not the thrust of this particular article. And, “this is not financial advice” :=)

      1. I didn’t communicate very well. I think many retirees have a mortgage, because their interest rate is lower than what they are earning from their 401K. I think Dave Ramsey advises something like that. I agree with you, I only feel that I can safely retire if I have no mortgage. But I could still lose everything with a million dollar medical bill. That’s why I mentioned a few weeks ago about checking out your state’s bankruptcy homestead exemption, which applies even if you don’t file for bankruptcy. A retirement home is a terrible thing to lose.

    2. Old Alaskan,

      Your statement “…I am very surprised at the number of commenters who are making financial plans as if our financial system will continue as it has.” is a very common belief from my observation of the prepping community. I sometimes wonder, though, if the most serious SHTF situation for the prepping community would be for the system to chug on as it has.

      I really like that Ken writes articles like this one that also recognize the potential for us to continue to live in a “normal” world.

    3. Our system will be just fine. If I hadn’t kept my money in the market I would have missed out on over 500k in gains during
      2020 and 2021

    1. Ditto Kula. Retirement never even enters my mind. As you said. Such is life.

  13. Good article Ken.
    My Dad taught my brother, sister and I the do’s and don’ts of debt and savings. He was a smart man with regard to finances. We did not come from wealth but made what we earned do some work for us. I can really appreciate that now and try to teach my children the same. I never paid interest on a CC and don’t care for banks and therefore do my best to work around them. Still driving my 1995 Toy. Tacoma I bought new. Toyota made a great 6 cyl. engine but I knew the bodies would rust out pretty fast from road salt so I bought a $500 beater unit to run in the winter instead of the truck. I liked running the front wheel drive car better than the truck in the winter anyhow. Lower center of gravity. Got me from point A to B just the same. Still have my truck and always getting comments on it. My friends tell me I am due for a new one. Anyone price a newer Tundra lately? I’ll stick with what I got for now. I tell the kids it comes down to wants vs. needs and the discipline to make the right decision.

  14. Is there ever such a thing a ” debt free ” retirement ?
    I’m fully retired with no more mortgage payments, but the bills never stop.

    1. Johnny Reb,

      Well, technically, one’s regular ‘bills’ is a different thing from being in debt. However, I get your sentiment! And don’t forget those taxes…

  15. “He is richest who is content with the least, for content is the wealth of nature.” -Socrates

    That was basically my strategy to become debt free and happy after getting wiped out 11 years ago.

  16. You know you have arrived, when you have the money…but, you do not need, or want, anything you don’t already have….and, neither do any of your children.

  17. One’s goal in Life, is to reach the point where your biggest problem is managing your boredom.

  18. I am with Kula in that I will not be able to retire “debt free”. I am like many people in that I moved to another state midway through my present career. I tend to take jobs and stay with the same employer for decades and one of my reasons for doing so is for the medical benefits on top of the pay. This means that I have purchased a house 2 times in my life. The first was a small home (2 bed and 2 bath). in the high tax state of California. My present home in my new home state is larger than the first house (3 bedroom 2 bath+office). I found it was much easier to sell a small, “starter-home” during a recession versus trying to sell a “McMansion”. The higher the asking price thins out the possible customers. In a recession, the customers with lots of money disappear. The house we have is big enough that my wife is happy. As a student of economics, I tend to view things like homes and automobiles as commodities where other people tend to “fall in love” with houses and automobiles. I view a home as George Carlin purposing: A Place for my Stuff. (ie. Buy a bigger home so you can buy more stuff). Like Ision mentioned, I have pared down my hobbies such that they are affordable and sustainable. A big help is the fact that I dislike golf. There are other expensive hobbies I will not even mention out there. This is a personal choice. (Tech bros in San Jose, CA used to say that God’s way of telling you you are making too much money is a mistress and a cocaine habit. San Diego a bumper sticker on the back of a boat trailer said: “he who dies with the most toys wins”)

  19. I have well over ten years to retirement and I’m debt free. I started paying off debt about 3 years ago at the start of COVID. It was student loans, my car, credit cards, all the usual stuff and my house. It’s been very difficult and so many sacrifices along the way, but so worth the journey. Ken, never stop telling people to live within their means…we are listening. :)

  20. I wouldn’t count on a 401k and/or an IRA or a bank or any other type of retirement portfolio – not in this environment and NOT with this “president”. But it’s your choice. Until recently I balked at pm’s but seeing as how China is buying literally tons of gold, well…. anything can and will happen.

  21. The off grid cabin is lit up like like shopping mall in that picture above. maybe add an irrigation system for the front lawn.

    1. My first impression of the cabin at the top of the article is that it looks like a Thomas Kinkaid painting. I love his art, but a prepper can usually find something “not exactly right” in most of his works. He was known as “the painter of light.”

  22. I hate debt. I have non. Own my home cars ECT. I will be retired in another year and will move from CA to a cheaper state.
    Pay yourself first was taught to me at the kitchen table when I was a kid.

    My way of dealing with purchasing anything is to divide the cost of it by how many hours I have to work to have it . It puts it into perspective for me.

    1. Poorman,
      very good point. before a person buy’s anything, think of what you had to do to get that money for the new toys. going into debt for that sort of thing is foolish. nothing wrong with having things nice like that, but save until you have the money to pay cash for it. the cost plus 15-24% interest is foolish on a loan or CC.
      as you said hrs worked vs purchases, it puts things into perspective.

  23. Living frugally can be challenging at first but eventually it becomes a habit. I often can afford and use things but it’s uncomfortable to buy now unless it’s a need. Something that helped us along was having like minded friends. Sold a rental and our big city residence and paid cash for our forever/retirement home. Can’t imagine the stress this generation is feeling never having experienced inflation and high interest rates. Been trying to retire for years but I work remotely as much or as little as I want now for almost twice the money. Kids you can do it!

    1. MamaLark,
      living frugally is not hard. it’s actually easier and more peaceful than trying to keep up with the johnses. it’s a lot less stress.

  24. Also your kids will appreciate learning to live a frugal lifestyle.

  25. I just paid off our home equity loan yesterday. It was a twelve year loan that we took out seven years ago in order to buy the property next to us. I paid more on it than I had to each month and had whittled it down to under $9,000. In the last year I’ve grown increasingly uncomfortable with having that debt since it was secured by the property we own, and had lived in free and clear. With the red flags in our economy growing more insistent, I just wanted this debt gone. My DH wasn’t totally sold on paying it off because it had a low interest rate, and there’s always the discussion about putting that money to work in investments, if you can make a higher rate than the interest rate you’re paying on your loan. That’s all well and good, but if everything goes south I want to know that we have a roof over our heads. We’re not that far from retirement, so I know paying this debt off was the right thing to do. Next we have a car loan to pay off. We had never taken out a loan for a car all these years until last year when our 1996 Honda wagon was hit and totalled. We were in a bind trying to find a good, newer car that I hope will last us for many years. But, again, there’s that debt. I don’t like it one bit. One debt down, one to go. And, hopefully, we’ll be able to navigate better to avoid future debt in retirement. Seeing how much everything costs gives me added motivation to NOT have any debt hanging over our heads in retirement years.

    1. Good job on taking care of that loan. I have been thinking the same thing and plan on going in the end of the week to pay off what’s left on our mortgage.

    2. Good job on taking care of that loan. I have been feeling the same way and plan to go in later this week and pay off what I have left on my mortgage.

    3. Congratulations NW Gal. Ken’s blog must have started many of us thinking. I also went in today and paid off the retirement home. Now, the state says it could take up to 6 months for them to issue me the patent.

      1. Thank you Old Alaskan and Arty. It’s sinking in today. So nice to have that debt gone.

  26. I never could afford a store bought ring with a sparkling diamond stone…
    All I can afford is this loving heart, the only one I own…
    ‘Cause I’m just a country boy, money have I none….
    But I’ve got silver in the stars and gold in the morning sun.

    Rest in peace Don Williams…and good night to my MSB friends.

  27. Dennis: One of my absolute favorites…Don Williams…great writer, great singer, captivating voice…miss that man~

  28. To clarify an earlier posting, retired at 66 1/2, will be 72 this year. Retirement plan was worked since the around 40, trial ran the retirement budget roundly 2 years before retirement, it worked out. Once retired stopped any dollar contributions to any sort of investments. At retirement was debt free, was able to reserve at the fingertips enough to “live on” for a couple of years if “it” tanks. Not loaded by a long shot, same as others, older home and vehicles, forgot about the he Joneses a long time ago. Still do a few fun things, not analysis paralysis, just minding my own and adapting necessary.

  29. Read through the attached article again “How to Reduce Your Expenses and Debt”. I’ve had “buyers remorse” more than once. For many, a tough cycle to break but that well written article walks you through point by point.

  30. We have no debt, but we’re about to take a chunk out of our IRA to buy the 40 acres next to us. We are a half mile off the road, with no close neighbors except my daughter and niece. The land for sale is close to our house, so we would like to purchase the peace and quiet of
    NO atv’s,
    NO kennel of hunting hounds,
    NO loud music,
    NO timber harvesting,
    and NO nosy neighbors.
    BTW, DH has a truck with an antique license plate, and mine qualifies for one in 3 years. Unless I have an accident, I will only get another one when I have saved up cash for it. I am not very frugal yet, but it’s coming!

  31. Debt free since early fifties. Keep you money invested the economy will be fine. Don’t listen to all the sky is falling people. If you did you missed huge returns in 2020 and 2021. Being debt free is easier when making over 300k

    1. Up north –

      Thank you for letting us know that all will be well as soon as each of us decides to “make over 300k”. Many of us here never realized that’s all we need to do, so simple. Which investment vehicles did you use in 20/21? And what do you mean by keeping our money “invested in the economy”? What does that even mean? Or was it just a vapid sputter to reinforce how smart you are?

      Perhaps you’d like to tell the class how much money your car(s) cost, where you live, how much your house is worth and how much walking around cash you have in your pocket. Before this morning I was lost in finance. But you make it so very simple, do you have a newsletter we could subscribe to?

      1. Tmac
        UN invested in fentanyl
        500% return
        Since bidet has been in office it has become like candy

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