If you are struggling financially, the thought of retirement may cause more stress and anxiety than relief. Fortunately, there are several measures available to help you begin to offset debt prior to retirement. This means you'll have to figure out how much to save, and you'll need to begin the saving process soon. Additionally, debt from different sources needs to be prioritized and reduced according to rank of importance. Credit card and mortgage debt, for instance, should be whittled down first, as they typically carry higher interest rates and fees that may hurt you financially in the long run.

Planning Financially for Retirement

When it comes to retirement financial planning, you'll want to consider how much you need to save to maintain an adequate quality of life. If you are trying to pay off debt, you may need to start putting away even more money, and try to reduce your current daily, monthly, and annual expenses. When providing retirement advice, many financial planners recommend starting with your most expensive debt – which is usually credit cards, and working backwards to pay off subsequent debts after that. Variable-rate credit cards typically charge large interest fees, and that debt is not tax-deductible. If you are paying interest on multiple cards, start by paying off the card with the smallest balance first. Once you have your credit card debt under control, you can move on to reducing debt from your home mortgage. Finally, if you are still paying off a car loan, this should be the last debt to pay off, since these loans have lower interest rates and expire in five years or less.

Managing Your Credit Report

One of the first steps you should take in reducing your pre-retirement debt is to know your current credit standing, and continue to monitor that score moving forward. To keep track of your credit rating, you should check your credit report. This lets you see your credit score, ensure the personal information you have on file with the three credit reporting agencies (Equifax, Experian, and TransUnion) is correct, and identify any potentially fraudulent or unusual activity. You may request a copy of your credit report from any one (or all three) of the credit reporting agencies mentioned above. To maintain optimal financial health, you should monitor your credit report on a routine basis. This can be done on your own, or through a credit monitoring service. Ideally, you should look at your credit daily, or at least once each week, to watch for any changes.

Debt Consolidation

Fortunately, there are several options for consolidating debt without affecting your credit score. First, you can take out a home equity loan. Provided you make payments on time and in full each month, this is a good way to get lower interest rates and higher loan limits. You can also choose a cash-out refinancing option on your home, which will enable you to deduct a portion of your home's value to pay off debt. If you have a decent credit score despite carrying debt, you may want to transfer your credit card balance. Some credit cards offer zero-percent interest balance transfers. If you have a card with this option, transfer your debt to that card. Doing so will lower your monthly payments, and can clear debt faster. Taking out a debt consolidation loan is another way to pay off debt. Be aware, however, that these loans may tack on extra fees, which makes them cost more than you may be paying for your debts. Lastly, you might consider borrowing money from a family member, friend, or relative. Chances are you'll avoid high interest rates, and will be forgiven for late payments.

When you are planning to retire, reducing your debt will help you financially and psychologically. Debt consolidation is a key, as it enables you to manage and track debt more effectively, and may help lower monthly payments. Tackle your largest debts first, and then move on to the smaller ones.

Amy Johnson is an active finance blogger who is fond of sharing interesting finance management tips to encourage people to manage their personal finances. More specifically, she advocates that people should check credit reports and scores regularly.