These are the 4 debts you need to pay off before you retire.

As a baby boomer (though not planning on retiring anytime soon), my wife and I have been working to slowly reduce and pay off some old debt. My crippling law school debt is long paid off and the mortgage rate on our house is as low as it can be and almost paid off. Credit card debt is now virtually non-existent.

Why? Because typically, your peak earning years are in your 50s, and as that decade recedes, it’s smart and prudent to try to cut back where possible. This, in turn, frees up disposable income for what we choose to do with it.

So let’s look at which debts are most important to eliminate before retirement, and how eliminating them (to the extent possible) can protect your savings and your future.

1. High-interest credit card debt

Credit card debt is one of the most financially draining obligations you can have due to high interest rates. As of 2024, the average annual interest rate on a US credit card will be 23.37%. Ongoing huge expenses like these can easily wipe out your retirement funds, quickly turning your savings into a goose egg.

Paying down revolving credit card debt should be public enemy No. 1 in your debt reduction plan. At a minimum transfer your credit card debt to one of these highly rated balance transfer cards. You may be able to pay it off earlier without additional interest.

2. Mortgage balance

Paying off your mortgage before retirement may be feasible, but only if you’ve budgeted for it. Many experts suggest paying off your mortgage in full before you retire, especially if interest rates are high. or if you live on a fixed income. Diverting your retirement funds to pay your mortgage will limit your financial flexibility.

Now, if paying it off completely is not possible, at least consider refinancing your mortgage or upgrading to a more affordable property to control your monthly expenses.

3. Car loans

Monthly car loan payments can be a significant cost, especially since the average car loan rate ranges from a low 5.25% to a whopping 21.55% (depending on your credit score), and maintenance costs can also increase for old cars. Pay these suckers off instead! It’s actually smart to pay off all your car loans before you retire so you have one less monthly bill to worry about.

Or at least consider selling one of the additional vehicles. You might even want to choose a more fuel-efficient car to reduce this financial burden.

4. Medical debt

Although Medicare and Supplemental Insurance help greatly with health care costs (thanks, FDR!), unexpected medical expenses can still arise, especially in retirement. Check this out: It’s estimated that a senior will need $165,000 to cover healthcare costs in retirement.

One thing to know about medical debt is that it is generally negotiable. This means that you may call your service provider and inquire about paying a bill for less than the amount on the bill. Play the pensioner card. It works.

So here’s the bottom line: eliminating and/or reducing debt before retirement is essential for a safer, stress-free retirement. By addressing these debts, you’ll set the stage for a financially stable (not to mention much easier) and more fulfilling retirement.