How to take action when the career clock is ticking
When you’re young, you picture your golden years of retirement as being carefree. It’s only fair that you get to reap the rewards of years of hard work, right?
Unfortunately, the rather stark reality for seniors in Canada today is that a staggering number of them are carrying massive debts into retirement. In fact, a report from Statistics Canada shows the number of seniors in debt aged 65 and over increased by 40 per cent between 2012 and 2015.
When you put this data alongside the knowledge that the group nearing retirement in their 40s and 50s are carrying record-high debt loads, it takes the shine off of the golden years.
“No matter what stage of life you’re in, it’s challenging to save when you have to pay down debt,” says Jeff Schwartz, executive director at the Consolidated Credit Counseling Services of Canada. “But when you’re getting toward the end of your career and staring retirement in the face, you need to get moving.”
Schwartz and the team at Consolidated Credit put together some tips for middle-aged Canadians wondering how they can tip the scales and build nest eggs instead of drowning in debt.
Start today and don’t delay!
While it would be great to be able to sock away savings in substantial amounts, that is probably not realistic if you are carrying a large debt load. Rome wasn’t built in a day – you need to be patient and persistent. Your smaller contributions will grow over time and interest and investment returns can speed that up. But you need to get moving. The longer you wait, the harder it will be.
Don’t rely on your house
While your home may be your biggest asset, don’t count on that solely as your retirement nest egg. You should never have all of your nest eggs in one basket. Equity in your house isn’t easily accessible. Also, the value of your home can fluctuate over time. You are even more vulnerable if you are carrying a high mortgage. What if you ended up owing more than you own?
If you haven’t already, start your RRSP. Set up monthly payments direct from your paycheque – that’s how saving becomes a habit. Make it seamless. Also, you can take advantage of the tax refund you’ll get for your contribution, either for more savings or to pay off debt. You’ve got to decide ahead of time though and employ a strategy and stick to it.
Don’t accumulate more debt
It goes without saying, but if you are in a position that debt is still a major financial weight as you near retirement, you should curb your debt accumulation. It becomes even more essential that you strictly assess needs vs. wants. Only use debt if it absolutely essential. Every debt dollar you accumulate will directly affect your ability to save.
Are you nearing retirement, but debt remains a persistent problem? We can help. Call one of our trained credit counsellors 1-888-294-3130 or check out our free online debt analysis tool to get started.