Worrying about outstanding debt obligations can ruin the golden years for retirees.

Three financial planners TheStreet spoke with explain how that doesn't have to be the case.

Build Your Portfolio For More Cash Flow

Coming into retirement with some debt does not mean that retirees need to fret about their financial future.

All it means is that they might need to shift a portfolio to include assets that will cover debt obligations, said Fritz Miller, a partner at Signature Estates & Investment Advisors.

"We want to design and manage a portfolio that will throw off enough dividend and interest income that will easily meet that debt obligation and their other living expenses," Miller said. 

This cash-flow matching system can usually guarantee retirees will have a stream of retirement income that can match the assets and liabilities of a client, Miller explained. Adding dividend-yielding stocks (such as the ones offered up on TheStreet's 'Income Seeker' service) and fixed-income securities like bonds ensure enough cash flow that they can mitigate an investor's risk in volatile markets.

Pay Off 'Bad Debt' Immediately

Figuring out which debts to pay off first can be a challenge for someone who might not understand how to prioritize their liabilities. However, eliminating what Charles Weeks, founder of Barrister Wealth Management, calls bad debt should be a priority for people once they're ready to retire.

Bad debt, not being used here in the traditional sense of the word, is any type of consumer debt with high interest rates like credit cards or long-term debts taken out on a depreciating asset like car loans. These debts can cut into retirement savings substantially and lead to problems down the road financially, Weeks said.

"If you go into retirement and you maintain those types of behaviors in retirement — borrowing money from credit card companies at 20-25%, getting underwater on every car you own — you're putting yourself in a really bad situation over those years where things should be comfortable in retirement," Weeks said.

The most ideal way to pay off bad debt is with any money you have in a savings, checking or brokerage account, Weeks said. These accounts are not taxed, and there are no other penalties associated with withdrawing funds from them. They also protect retirees from having to dip into their retirement accounts too early.

"There's no penalty for taking money out of a brokerage account, or savings or checking," Weeks said. "Take the money from there first. If that option is not available and all they have is qualified money like an IRA or 401k, depending on how much debt they owe, I think it would make sense to take a distribution to pay off credit cards if they have them."

Extend the Terms of Your Debt

For people who are looking to maximize their free cash flow in retirement but are burdened by debt, repackaging that debt into longer terms could be an option, said Charles Adi, a financial planner for Blueprint 360.

By doing so, retirees can pay lower monthly interest payments, which means there's extra money that they can be used for unexpected expenses or lifestyle choices. Adi has noticed his clients at his Houston-based company have begun opting more for this strategy because of the freedom and peace of mind that comes with, he said.

The tradeoff with this strategy is that extending the life of a loan means paying more interest than one would normally. 

Adi warns that this strategy might not make sense financially for most retirees and advises people should explore all of their options first before settling on refinancing.

"You have increased interest expense over the life of that loan and to me that's wasted dollars," Adi said. "The second thing is that when most people tell me they want to do this, they say they're going to save the money. Well, I know from history that most don't save that extra money. They just spend them on lifestyle things. That's where that inner turmoil comes into play."

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