For many of us, retirement represents the end of many years of meticulous financial planning. You’ve anticipated your needs, prepared for them, worked hard throughout your career, and now you want to relax. If your main debts are paid off, such as your mortgage and even cars, you might feel tempted to “relax” a bit too much. Keep in mind that your credit score is still important now, even if you don’t plan to make any larger purchases throughout retirement!
Retires do still borrow money. Maybe you’re not planning on another large purchase, like a car or house, but emergencies can happen to anyone. A major home repair could prompt you to take out a personal loan, or that paid-off vehicle might not last as long as you had hoped.
Your credit score impacts other areas of your finances. Did you know that your credit score affects your car insurance rates? It also impacts your ability to gain access to the best credit cards, which you might want to use in order to access valuable points programs or consolidate higher-interest cards. Your credit score is even accessed by potential employers, which could become important if you ever want to work part-time.
No one likes to think about it, but you can’t always depend on your spouse’s credit score. Even if your credit score tanks, you might assume that this isn’t a big problem, since your spouse’s score is still just fine. Unfortunately “gray divorce” (divorce during retirement years) is becoming more common. And of course, your spouse could pass away prematurely. In either case, you won’t be able to rely upon their top-notch credit rating anymore.
The bottom line: Credit scores are always important, no matter the stage of your life. Consider maintaining the following good habits even after you retire:
- Continue to use one or two credit cards. Just remember to pay them off each month, or at least keep balances low (under 30 percent of the credit limit).
- Keep your cards in a secure location to avoid theft.
- Watch your credit report, and report suspicious activity to credit bureaus immediately. Retirees are often targeted for identity theft.
- Follow proper safety protocol when shopping online. Look for the “lock” symbol in your web browser, to indicate a secure website.
- Don’t give out identifying information, such as credit card numbers or your Social Security number, over the phone or email.
- Never co-sign loans. You don’t want to end up responsible for a grandchild’s car payment when you’re living on a fixed income.
And remember, financial planning doesn’t stop at retirement! Continue to schedule regular meetings with us throughout your retirement years, so we can help you stay on top of your budget and income plans.
