Debt Advice for a Better Retirement: Review Your Plans NowNov 28, 2016
Have you sought debt advice over the past year? Canadians are at their limit with debt—baby boomers included—and as retirement draws closer, it can be very risky to be holding on to debt. Studies show that 6 out of 10 Canadians would have trouble covering their costs if their debt payments rose by $300 a month while half of Canadians are living paycheque to paycheque. This could be a concern for boomers who will soon be living on a fixed income and unable to manage extra debt payments.
This is why it is ever-important to keep your retirement plans in focus and update them accordingly. Boomers who are set to retire should take advantage of Financial Literacy Month to ensure they are on the right track and meeting their financial goals.
In preparation for retirement, there are some questions to ask yourself:
- How much will I need to retire comfortably?
- Will I be able to stay on budget with a reduced income?
- Am I relying on inheritance to help supplement my retirement years?
- How will I manage debt during retirement?
Make debt a priority. Take a look at your finances over the past year – were you able to pay down debt and add to retirement savings and investments? The Financial Consumer Agency of Canada (FCAC) can help you improve your financial literacy and learn about which debt options could work for you.
Don’t rely on inheritance. Baby boomers are set to inherit $750 billion dollars over the next decade or so, which could translate to about $180,000 on average. However, relying on this money as a retirement plan could prove to be unwise. First of all, because Canadians are living longer, and often require expensive long-term care in their later years, you might end up with less of an inheritance than you were expecting. And banking on a bail-out in the near future should not be seen as an excuse to spend recklessly or take on debt only to pay it off when the inheritance money comes.
Contribute as much as possible to savings. It is important to have a clear picture of how to refine your goals for the upcoming months and stay on track. The FCAC can help you make sense of your savings priorities.
Stress test your budget. Re-evaluate your budget and cut excess spending now to get a sense of what it will be like to live on a reduced income. Refer to a retirement budget worksheet to get started.
Deal with debt before retirement
Reviewing and refining your debt management strategy now will help you manage when you are past your earning years. If you are having difficulty managing debt, along with your other monthly obligations, it may be beneficial to speak to a debt professional. A Licensed Insolvency Trustee in Hanover can explain your debt options such as credit counselling, debt management strategies or filing a consumer proposal to consolidate debt. All of these options can make it easier to meet your monthly financial obligations and get back on track toward saving for the future.
Financial Literacy Month is an excellent time to explore your options. For more info about income during retirement, you can visit the FCAC website.
Have you considered seeking debt advice in regards to your retirement plans? To join the conversation about Financial Literacy Month, search the Twitter hashtag #FLM2016