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A Fin24 user who is undergoing debt review and a few months away from retirement, wants to know if he should sell some of his assets to pay off debt.
He writes: "I am retiring within the next few months with around R200 000.00. I am under debt review for around R150 000.00. I have a flat valued at R160 000.00, which is debt free. What is the best advice for me: Should I pay the debt and what do I live on?"
Wikus Oliver of DebSafe answers:
Good day. We wish you all of the best with your retirement going forward. This is always a tricky question to answer. There are so many things to consider. For one, your age would be a consideration. How large is your debt review repayment.
How much do you earn from your pension? If you are 60 now and have the possibility of living until 80 you'll have to stretch this money and make it work for you for the next 20 years.
My advice would be not to take your pension to settle your debt now. Selling you flat would also leave you with a situation where you have to rent a place. Remember the golden rule: keep your home because it will always be an asset.
If your debt repayments are low enough.... simply pay the minimum required at this stage. Time will go by and some more options might open to increase your income. Chances are those options might require some cash flow, which you won't have if you had otherwise spent it on your debt.
The challenge with retirement is always that you do not know for certain how long you are still going to live. The little cash you have needs to look after you for the rest of your life.
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