I am 63 years old, I was recently divorced and I am in debt of $ 130,000. How will I retire?

I am 63 years old and recently divorced. I earn $ 68,000 a year and had always planned to retire when I reach my full retirement age in March 2025. However, as a result of the divorce, I now have $ 100,000 in unsecured consumer debt and another $ 30,000 in student loans, and around. $ 170,000 on my 401 (k).

Every penny I earn is needed to survive and service debt. My payment history is considered “exceptional” on all accounts (in the language of Experian), but because it has been spread too long, my FICO score is only 650. If I retired today, I would withdraw $ 1,200 a month from Insurance Social, or $ 1,400 a month if I drew against my ex-husband’s account (we were married for 23 years). If I wait until my FRA, those numbers will go up to $ 1,500 and $ 1,800. Do you have any advice for me? See: Confused about Social Security, including spousal benefits, claim strategies, and how death and divorce affect your monthly income? Dear reader, I am sorry to hear that you are in this stressful situation. A divorce can wreak havoc on a person’s retirement security, much less their overall finances. Debt management should be the priority right now, financial advisers said. “Your first step would be to try to control your debt,” said Michael Resnick, certified financial planner and senior wealth management advisor at GCG Financial. “You may want to try refinancing your debt, or if it’s credit card debt, you might try to find a card that will take your balance with a lower interest rate.” There are a few ways to deal with your debt. One strategy is to pay off debts at the highest interest rates, so that you pay the least interest that is necessary. Another option is to pay minimums on each and every account, except the card or account with the smallest debt; that’s where I would put extra money. When that account is liquidated, move that extra cash flow to the next smaller debt load, and so on. This is known as the “snowball” effect. Balance transfer credit cards, like the one Resnick suggested, might have a 0% introductory rate, which would be a great way to eliminate interest payments entirely and get the most out of your repayments. But these cards usually have a specific time frame for that 0% rate, like 15 or 18 months, until they go off the charts. If you go this route, it’s crucial to have a payment plan in place and a backup plan in case you can’t afford it before the 0% promotion ends. Another option is personal bankruptcy, Resnick said. However, this route requires serious consideration, as there are consequences to filing for bankruptcy. Bankruptcies stay on your credit report for up to 10 years, and many lenders may require applicants to wait four years before attempting to obtain a home loan. The most common type of bankruptcy, known as Chapter 7, allows people to keep certain possessions, such as wedding rings, some real estate and auto properties, and professional tools (but the rules will vary by state). The good news: Credit scores begin to recover shortly after filing for bankruptcy, and this route will keep the retirement assets in your qualified plan protected. If the option of bankruptcy doesn’t seem attractive to you, don’t worry. Matthew Benson, a certified financial planner and owner of Sonmore Financial, suggests setting a goal to pay off debt in two to three years, which might require finding additional income through overtime, temporarily taking a side job, or delaying your retirement date. planned. back off a bit (which would also “bolster retirement savings,” he said). It sounds exhausting, maybe even a little overwhelming I’m sure, but Benson said he’s seen clients sacrifice this kind of time and energy to pay off massive amounts of debt. “You need a goal to start working on it,” Benson said. Check out MarketWatch’s “Retirement Tips” column for practical tips for your own retirement savings journey. Remember that these are just suggestions too – you need to do what you can to improve your situation and not burn out even more. Now let’s move on to Social Security. When to claim Social Security is a very personal decision, but there are a few ways to think about it for you. For one thing, if you delay until at least your full retirement age, you’ll get more money in your paycheck each month, Benson said. On the other hand, if you can’t increase your income in the short term until your full retirement age, claiming early wouldn’t be the worst and would help you pay off your debt faster, Resnick said. “I guess the interest rate on consumer debt is higher than your Social Security growth factor, so if you can’t eliminate or refinance the debt, filing an advance return might make sense,” he said. Try to keep up with contributions to your 401 (k), but maybe just focus on meeting your employer’s contribution and putting the rest of the cash on hand to pay off the debt, Benson said. “This is a scenario where it is very challenging to see your long-term goals in the middle of debt,” he said. “I’m less concerned about the cost of debt and more focused on how she can get out of debt so she can have a realistic picture of what the future will be like.” A financial advisor could help you navigate this new way of life: Resnick said he often recommends that people speak with a financial planner before finalizing a divorce to find strategies to smooth the transition. And remember, don’t be too hard on yourself during this difficult time. Divorce later in life has become much more common, and legal paperwork isn’t the only expensive aspect of it. “It is more expensive to live apart than together, which makes a financial plan very difficult,” Benson said. “Often times, both individuals in divorce have to substantially modify today’s lifestyle and future goals in order to make things work.” Do you have any questions about your retirement, including where to live? Email HelpMeRetire@marketwatch.com