Should I borrow from my retirement fund to pay down debt?

The question of whether to use your retirement savings to pay off debt is a critical one, especially for those who are retired or approaching retirement. It’s a decision that requires a balance between immediate financial relief and long-term security. Here’s what you need to know to make an informed choice, keeping your financial health and retirement happiness in mind.

The global financial landscape has shifted significantly in recent years, partly due to the lasting impact of the COVID-19 pandemic. Many countries, including Australia, Chile, and South Africa, have introduced policies allowing people to access portions of their retirement savings to ease financial strain. While these measures may provide relief, they also highlight a dilemma faced by many: should you dip into your retirement savings to manage debt?

Except for owning a home our retirement funds are often the largest savings we have, especially for low- to middle-income earners. This can make these funds a tempting option when debt feels overwhelming. In fact, studies show that a significant percentage of people use retirement withdrawals to cover expenses like car payments, home costs, or short-term debt. However, the decision to use retirement savings for debt repayment isn’t one-size-fits-all—it depends on your unique financial situation, goals, and habits.

Debt with high interest rates, especially unsecured loans like credit card debt, can take a toll on your finances. At the beginning of most loan repayment periods, a large portion of your payments goes toward interest rather than reducing the principal amount. This means the longer the debt lingers, the more you pay overall. Using your retirement savings to pay off high-interest debt can potentially save you thousands of dollars in interest and shorten the repayment period.

Short-term loans and unsecured debts are particularly costly because they lack collateral, making them riskier for lenders and more expensive for borrowers. By paying off these types of debt, you can free up cash for other uses and even improve your credit score. However, this strategy is most effective if paired with a clear plan to avoid falling back into debt.

Using retirement savings to settle debt should be part of a broader financial strategy. Once the debt is gone, think about how you can use the freed-up cash to strengthen your financial position. For example, you might focus on rebuilding your savings, investing in assets, or setting aside funds for future needs. On the other hand, if you continue to accumulate debt after withdrawing from your retirement funds, it can lead to a cycle that undermines your financial stability.

Without changes in borrowing behaviour, tapping into retirement savings to pay off debt can leave you worse off. You not only miss potential growth from your retirement investments but also risk needing to work longer or reduce your standard of living in retirement.

Consider the long-term consequences carefully. If you withdraw $30,000 from your retirement savings at age 35, that amount could grow to over $200,000 by age 55, assuming a 10% annual return. Frequent withdrawals can significantly erode your nest egg, forcing you to work beyond your planned retirement age or make other financial sacrifices.

Additionally, remember that withdrawals from retirement savings are typically subject to taxes, which can further reduce the amount available for debt repayment.

Before using your retirement savings, it’s crucial to reflect on the habits that led to the debt. Are you paying only the minimum due on loans while continuing to borrow? Are you using one form of debt to service another? Addressing these patterns is essential to prevent future financial stress. Otherwise, dipping into your retirement funds may become a temporary fix rather than a sustainable solution.

The decision to use retirement savings to pay off debt is not just about numbers—it’s about your overall financial well-being. It requires careful consideration, planning, and, ideally, guidance from a financial advisor. By weighing the immediate benefits against the long-term consequences, you can make a choice that aligns with both your current needs and your retirement goals.

Retirement savings represent years of hard work and planning. Treat them with the care they deserve, and ensure that any decision to access them is made with your future self in mind if you are not sure, talk to your financial advisor.

How Much Money Will Actually Make You Happy in Retirement?

As the New Year gets underway, you’ve taken some time to review your financial situation. You’ve felt that familiar pinch—credit card bills from the holidays, reminders of overspending on gifts and celebrations, or even a nagging sense of needing to prioritize your health with some exercise and better eating. It's understandable if the thought of your financial future feels overwhelming right now, especially if retirement is looming or already here.

The truth is, that financial reviews can be sobering. Many people assume they’ll need a retirement income close to what they were earning full-time, and the realization that this might not be feasible can feel unsettling. However, here’s the good news: you may be overestimating the role money plays in your retirement happiness.

While it’s natural to equate earnings with self-worth, retirement offers an opportunity to reframe that mindset. For many, certain financial burdens, like mortgage payments, may be behind them, leaving more room for flexibility. Studies show that for middle-income earners, a paid-off mortgage can reduce financial needs by up to 50%.

Additionally, the notion that “more money equals more happiness” isn’t as solid as it seems. Behavioral finance teaches us that the well-being we gain from wealth diminishes after meeting basic needs like food, clothing, and housing. Beyond these essentials, additional income may not add significantly to your happiness.

In fact, research has found that the difference in life satisfaction between someone with a modest income and someone earning $500,000 annually is smaller than you might imagine—less than one-fifth of the range of responses in terms of happiness. The takeaway? Serious money isn’t the key to a satisfying retirement.

Happiness in retirement is about more than just dollars and cents. It’s about how you choose to spend your time and align your financial plans with your life goals. Yoga, fly-fishing, nurturing relationships, volunteering—these are just some of the ways to boost your well-being without draining your savings.

Financial advisors and behavioural researchers often recommend reframing how we think about retirement planning. Instead of fixating on rigid savings targets, try these steps:

1.     Recognize that your savings are a means to an end, not the end itself.

2.     Define your broader life goals. For instance, do you dream of a family holiday home where your children and grandchildren can gather?

3.     Identify your emotional needs, like staying connected to loved ones or finding activities that bring purpose and joy.

By focusing on what truly matters to you, financial planning becomes a tool to enhance your quality of life rather than a source of anxiety.

Of course, this doesn’t mean neglecting financial preparation. A solid plan is still essential for covering your needs. But the ultimate goal is to strike a balance where financial planning supports your happiness and freedom, rather than limiting them.

Retirement isn’t about living in deprivation or clinging to your past income level. It’s about finding fulfillment in ways that don’t always come with a price tag. Whether it’s rediscovering old passions, creating new traditions, or simply enjoying the slower pace of life, there are countless ways to find joy that don’t depend on a hefty retirement account.

So, as you plan for retirement—or settle into it—remember happiness is about more than numbers on a spreadsheet. It’s about living a life that feels meaningful and satisfying, whatever your income level may be.

A look at ageing and relationships with humour

 My wife and I were watching TV, and a commercial came on for a wrinkle cream.

She said, "Do you think I should try that?"

I said, "Why? You're not the target demographic yet."

And that's when the fight started.

I told my wife, "You still look as beautiful as the day we met."

She smiled and said, "Aww, that’s so sweet!"

Then I added, "Except now, your beauty comes with more character lines."

And that's when the fight started.

We were at the doctor’s office for our annual checkup, and the doctor asked if I was staying active.

I said, "Does chasing after my wife when she can’t remember where her keys are count?"

And that’s when the fight started.

I was flipping through our wedding album when my wife sat next to me.

She said, "Do you think I’ve changed much since then?"

I replied, "Not at all! The photo just needs better lighting now."

And that’s when the fight started.

My wife was doing yoga in the living room, and I said, "Wow, you’re really flexible for your age!"

She smiled and said, "Thanks!"

I added, "Yeah, your joints make all kinds of interesting sounds now."

And that's when the fight started.

I asked my wife what she wanted for her birthday.

She said, "Something that’ll make me feel young again."

So I handed her a coloring book and crayons.

And that’s when the fight started.

My wife told me she read an article that said a positive attitude can help you age gracefully.

I said, "Great! You’re already aging; now you just need the grace part."

And that’s when the fight started.

We were grocery shopping, and I grabbed a pack of energy drinks.

My wife said, "Don’t you think you’re a little old for those?"

I replied, "Well, I’d grab the prune juice, but you already put it in the cart."

And that's when the fight started.

I was reading the newspaper when my wife asked, "What does the horoscope say to me?"

I said, "It says you should stop asking me questions while I’m trying to read."

And that’s when the fight started.

My wife said, "Let’s make a bucket list for our golden years."

I said, "Sure, as long as it includes sitting quietly and not spending money."

And that’s when the fight started.

A bevy of very old jokes for recycling in 2025

My wife asked me to take her to one of those fancy places where they serve small portions of food on big plates.

So I took her to a hardware store.

And that's when the fight started.

I was in the kitchen when my wife asked, "What's for dinner?"

I replied, "Whatever you're making smells amazing!"

She wasn't cooking.

And that's when the fight started.

My wife was putting on makeup, and I asked, "Why do you wear so much makeup? You look great without it."

She smiled and said, "Really? That’s sweet!"

Then I added, "But with it, you look amazing on Zoom calls."

And that's when the fight started.

My wife was struggling to open a jar, so she handed it to me.

After I opened it easily, I said, "Looks like you loosened it for me."

She replied, "At least I loosened it, unlike your sense of humour."

And that's when the fight started.

I asked my wife, "Honey, where do you want to go for our anniversary this year?"

She said, "Somewhere I've never been before."

I said, "How about the kitchen?"

And that's when the fight started

My wife and I were watching Who Wants To Be A Millionaire while we were in bed.

I turned to her and said, 'Do you want to have Sex?'

'No,' she answered.

I then said, 'Is that your final answer?'

... She didn't even look at me this time, simply saying, 'Yes..'

So I said, "Then I'd like to phone a friend."

And that's when the fight started...

________________________________

I took my wife to a restaurant.

The waiter, for some reason, took my order first.

"I'll have the rump steak, rare, please."

He said, "Aren't you worried about the mad cow?"

"Nah, she can order for herself."

And that's when the fight started.....

_____________________________

My wife and I were sitting at a table at her high school

reunion, and she kept staring at a drunken man swigging his

drink as he sat alone at a nearby table.

I asked her, "Do you know him?"

"Yes", she sighed,

"He's my old boyfriend. I understand he took to drinking

right after we split up those many years ago, and I hear he

hasn't been sober since."

"My God!" I said, "Who would think a person could go on

celebrating that long?"

And then the fight started...

________________________________

When our lawn mower broke and wouldn't run, my wife kept hinting to me that I should get it fixed.

But, somehow I always had something else to take care of first, the shed, the boat,

making beer.. Always something more important to me.

Finally she thought of a clever way to make her point.

When I arrived home one day, I found her seated in the tall grass, busily snipping away with a tiny pair of sewing

scissors. I watched silently for a short time and then went into

the house. I was gone only a minute, and when I came out again

I handed her a toothbrush.

I said, "When you finish cutting the

grass, you might as well sweep the driveway."

The doctors say I will walk again, but I will always have a limp.

_____________________________

My wife sat down next to me as I was flipping channels.

She asked, "What's on TV?"

I said, "Dust."

And then the fight started...

________________________________

Saturday morning I got up early, quietly dressed, made my lunch, and slipped quietly into the garage. I hooked up the

boat up to the van and proceeded to back out into a torrential

downpour. The wind was blowing 50 mph, so I pulled back into the garage, turned on the radio, and discovered that the weather

would be bad all day.

I went back into the house, quietly undressed, and slipped back into bed. I cuddled up to my wife's back;

now with a different anticipation,

and whispered, "The weather out there is terrible."

My loving wife of 5 years replied, "And, can you believe my stupid husband is out fishing in that?"

And that's how the fight started...

_______________________________

My wife was hinting about what she wanted for our upcoming anniversary.

She said, "I want something shiny that goes from 0 to 150 in about 3 seconds."

I bought her a bathroom scale.

And then the fight started......

______________________________

After retiring, I went to the Social Security office to apply

for Social Security. The woman behind the counter asked me

for my driver's License to verify my age. I looked in my pockets

and realized I had left my wallet at home. I told the woman that

I was very sorry, but I would have to go home and come back later.

The woman said, 'Unbutton your shirt'.

So I opened my shirt revealing my curly silver hair.

She said, 'That silver hair on your chest is proof enough for me' and she processed my Social Security application.

When I got home, I excitedly told my wife about my experience at the Social Security office.

She said, 'You should have dropped

your pants. You might have gotten disability too.'

And then the fight started...

________________________________

My wife was standing nude, looking in the bedroom mirror.

She was not happy with what she saw and said to me,

"I feel horrible; I look old, fat and ugly. I really need you

to pay me a compliment.'

I replied, "Your eyesight's damn near perfect."

And then the fight started........

________________________________

I rear-ended a car this morning...the start of a REALLY bad day!

The driver got out of the other car, and he was a DWARF!!

He looked up at me and said 'I am NOT Happy!'

So I said, 'Well, which one ARE you then?'

That's how the fight started.

________________________________

One year, I decided to buy my mother-in-law a cemetery plot

as a Christmas gift...

The next year, I didn't buy her a gift.

When she asked me why, I replied,

"Well, you still haven't used the gift I bought you last year!"

And that's how the fight started.