Billie Holiday (here at LIFE photographer Gjon Mili's New York studio in 1942) had a hard-knock life, and it showed in her singing, which was intimate, soul-searching, and unforgettable.
Time & Life Pictures/Getty Images
By Beth BravermanDonna Rosato and Penelope Wang
February 18, 2013

This story is part of Money magazine’s special Dream big, act now: Six secrets of retirement, which lays out the key drivers of retirement happiness — including your investments, health, career, family, midlife changes and debt — and what you can do about them.


The secret: Burn the credit card, not the mortgage.

Even longtime savers sometimes retire in the red, perhaps after getting pinched by a job loss or a health problem.

An Ameriprise survey of older workers with at least $100,000 in assets found that 22% weren’t on track to pay off their credit cards by retirement.

High-cost debt is especially dangerous in retirement because you are likely to see your income go down, and if you draw heavily on your nest egg to keep up with payments, you’re more vulnerable to outliving your money.

Well before 65, have a plan to wind down those obligations.


Paying off pricey debt is the only good reason to save less. Just make sure to put away enough to get any employer match.

Use these rules of thumb for college debt. It’s tempting to take big loans to pay for a kid’s dream school. Have your child look into Stafford loans first (borrowing over four years no more than his projected first-year salary), and then consider Parent Plus loans or co-signing on a private loan.

The rules: Don’t borrow more for all of your children than your annual salary. And be sure you can pay it off in 10 years or by the time you retire, whichever is first, says Mark Kantrowitz of

There’s less rush to pay off a mortgage. With today’s rates and favorable tax treatment of mortgage interest, you may be paying less than 4%. Eliminating the mortgage can make sense, since it lowers your expenses.

If you can afford the payments, however, you can hang on to the loan to leave more of your money in a diversified portfolio, says Kimberly Foss of Empyrion Wealth Management.

If most of your assets are in a tax-deferred account, then by not cashing out, you’re also deferring taxes as your investments continue to grow.

More secrets to a dream retirement:





Midlife changes

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