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How to Get a Loan in Retirement

November 04, 2022

Written by Taylor McKnight



  • Loans are still available for those who have retired
  • In retirement, income is evaluated mainly by Social Security, pension, and retirement account funds
  • Creating a repayment plan and managing debt is imperative to avoid additional interest and late fees


Retirement is a huge milestone in anyone's life. There are so many changes once you retire, including your flow of income. Consequently, this change affects your access to financial services, such as accessing loans.

Factors to Consider when Looking for a Loan

Credit Score

To get the most out of the loan agreement, you must look at things from the lender's perspective. Start by evaluating your credit score before going to the lender. You can check your score through a free credit scoring website at any time.  If it could use some improvement, take some steps to improve your score before you go to the lender.

You can also take it a notch higher and get assistance from a non-profit credit counselor. They will provide an approach unique to your situation to raise your credit score.

Loan Types

You could potentially qualify for several loan types, including:

  • Mortgage,
  • Auto, and
  • Personal loans.

Within these three categories are loans that can use a variety of collateral, including after-tax investments as in a security-backed loan.

In addition, it will be helpful to take some time to understand the liability of every kind of loan. For instance, you might be able to refinance a mortgage without liquidating your other investments.

However, you should be careful not to walk blindly into an agreement. Before getting a loan, you need to assess your income and understand how  loan payments will affect your monthly budget.

How Lenders View your Retiree Income

In most cases, the lending criteria for retirees are no different from that used for younger borrowers. The lender will evaluate your

  • Income
  • Asset, and
  • Credit profile.

A common source of income for retirees is Social Security. Lenders will view this as the primary source and will not put an expiration date on it. Pensions from the government or a corporate employer are also viewed as regular and consistent income.

If you have spousal support or survivor's benefits, your lender will consider this a limited source of income. The reason is that these funds will run out at some point. Nevertheless, it can be viable in your application if you prove that you are eligible for payments for another three years or more.

The lender will also consider other sources of income, such as retirement accounts like a Roth IRA or 401(k).

The most important thing you need is a solid repayment plan before signing any loan agreement. Earnings don't matter as much as the amount you can manage towards loan repayment.

The Next Steps After Taking Out a Loan

Manage your Debt

After negotiating the terms of a loan and a repayment schedule that meets both parties' needs, the next step is debt management.

While you might have more time to do something like traveling the world, you should consider keeping your expenses low so that you can have the resources to offset the debt.

If you have other debts, you should consider ranking them in order of priority. Create a comprehensive list of all the debts you owe, your monthly payment, your total balance, and the interest rate. Then pay off debts with the highest interest first, like your credit card balance.

You can also evaluate your debts to determine which reduces your tax liability and keep it.

Research Other Avenues of Income

You might also consider finding an additional source of income, like teaching, sales, or consultancy to boost your revenue. The extra money can make a huge difference, not only in preventing the need for future loans but assisting in the repayment process as well. 

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About the Author

Taylor McKnight is a Digital Marketing PR Specialist representing businesses and companies across all niches. Having been brought up in a small town in Mississippi, Taylor grew to love communicating with others from different areas. Other than writing articles, Taylor is an experienced social media manager, video editer, and event marketer.

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