[laptop-accessibility] Martin Pelmore, Prepare for Retirement by Safeguarding Your Credit Score
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Fri Jan 4 06:15:31 EST 2008
Martin Pelmore, Prepare for Retirement by Safeguarding Your Credit Score
San Mateo, CA (PRWeb) January 31, 2007 -- This year, the oldest Baby Boomers
turn 61, meaning that the United States has officially begun the race to
Baby-Boomer retirement. With many thousands of Americans retiring each year,
and the number expected to grow, Bills.com co-founder and co-CEO Brad Stroh
suggests that those entering their "golden years" check their credit scores
before giving up their paychecks or moving into their retirement homes.
"People considering retirement should remember that their credit scores --
and the creditors that scrutinize it -- will not disappear with the first
withdrawals from retirement funds," Stroh said.
Credit scores incorporate credit history, amount of credit available and
used, number of late and on-time payments and whether any payments due are
in default. Creditors also analyze other factors, including debt and payment
history relative to income -- one factor sure to change at retirement. Some
creditors also consider job history, which ends when an employee leaves
Credit scores fall in a range between 300 and 850, with higher numbers
indicating a greater likelihood of repaying debt. A score below 680 usually
results in a borrower being charged a higher interest rate or denied credit.
To maintain a credit score that will make for an enjoyable post-retirement
life, Stroh suggests the following:
1. Before retirement, focus on investing. Eliminate credit card debt by
funneling money previously used to shop, dine out or travel to paying debt,
and then into retirement savings. People age 50 and over can contribute
$20,500 to a 401(k) plan in 2007, and $5,000 to an individual retirement
account or Roth IRA. For people younger than 50, those limits are $15,500
for a 401(k) and $4,000 for an IRA.
2. Live on planned retirement income now. Give retirement a "dry run" by
living on your anticipated post-retirement income. Consult a financial
planner to determine how much income you will require. Meanwhile, use the
savings to pay off remaining debt (including credit cards, vehicles and home
3. Line up insurance. Review insurance needs, including homeowner's, auto,
long-term care, umbrella policies and life insurance (which might not even
be needed in retirement). If changes are needed, make them while employed.
Insurers give their best rates to people with good credit scores, so plan to
stay with a policy for a while during the transition to retirement.
4. Settle into home and financing. If you plan to move to a smaller home or
a condominium, consider moving before retiring. You are likely to receive
better mortgage terms with your current income than you will later. The tax
deductions associated with a move also might benefit you more while
employed. Similarly, for the best terms, open any planned home equity line
of credit on a home before retirement.
5. Keep the cards. If you plan to streamline finances, think twice about
closing old accounts. Credit scores are partly determined by comparing debt
to credit available. Closing unused accounts while maintaining some debt
results in a likely higher debt-to-credit ratio, which looks like a greater
credit risk -- and lowers credit scores.
6. Check credit reports now -- and frequently later. Don't retire your
vigilance when you retire. Check credit reports at least once a year -- more
often if you plan extensive travel, which exposes seniors to greater risk
for fraud and identity theft. Free credit reports are available once a year
at . All three credit reporting agencies (Equifax, Experian and TransUnion)
offer credit reports online, as needed.
"Retirement is about relaxation," Stroh said. "Make sure you can make the
most of it by securing every aspect of your finances first, starting with
your credit score."
Based in San Mateo, Calif., Bills.com is a free one-stop online portal where
consumers can educate themselves about complex personal finance issues and
save money by choosing the best-value products and services. Since 2002,
Bills.com and its partner company, Freedom Financial Network, have served
more than 10,000 customers nationwide while managing more than $350 million
in consumer debt. The company's co-founders and CEOs, Andrew Housser and
Brad Stroh, were named Northern California finalists in Ernst & Young's 2006
Entrepreneur of the Year Awards.
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