If you're about to retire, the last thing you need is a lot of bills.
Over the past 30 years, American families have taken on increasing amounts of debt, even as incomes failed to keep pace. About 80 percent of American households now have some form of debt, according to the Pew Charitable Trusts' survey of American family finances.
Older Americans owe more than ever before, with the amount of debt held by people over age 60 hitting $3 trillion, according to the Federal Reserve Bank of New York.
But living the retirement of your dreams means getting out of the red.
Here's a look at three major types of debt Americans take on and how best to manage them before you quit work.
Most Americans' largest liability is their home mortgage. In fact, nearly 33 percent of Americans' total spending goes toward this one big-ticket item. So without a steady income, you could find yourself in trouble.
If you have a few years before leaving the labor force, try making extra payments toward your principal each month. If you're timeline is shorter, consider downsizing to a cheaper house that you can pay cash for, said Chris Schaefer, a senior investment advisor at MV Financial in Bethesda, Maryland.
More than 33 percent of American households are making car payments, according to Pew, with nearly $1 trillion in auto loans now outstanding.
But unlike a mortgage, you get no tax relief from the interest you pay on car loans, and many of these payments can be hefty.
If you're in need of a new vehicle, pick one that you can pay for in cash, or, if you need to finance it, make sure the loan is satisfied the year you plan to retire, Schaefer said.
Because card issuers charge much higher interest rates than other types of lenders, carrying a credit-card balance can quickly escalate.
For example, if you owe $5,000 on credit cards at 16.71 percent, it would take you 46 months — almost four years — to pay that off, assuming you made $150 monthly payments. And you'd also be coughing up $1,768 in interest.
Start with highest interest debt and work your way down, Schaefer said. "I take the view that you're not financially independent until you are debt free."