It's never too early—or too late—to start planning for a debt-free retirement. Whether you're in your 30s or closer to retirement age, taking action now to manage your finances can help you enjoy the freedom and peace of mind that retirement should bring.
For many Canadians, having debt at retirement can feel like a heavy burden. You've worked hard, and retirement should be a time to relax and enjoy life. But debt, whether from credit cards, lines of credit, payday loans, or lingering bills can quickly derail even the best-laid plans. In fact, according to recent reports, a growing number of Canadians over the age of 55 are entering retirement with significant debt, often due to rising living costs, unexpected medical expenses, or caring for adult children.
If you are approaching retirement, start by asking yourself: Am I financially ready? Think about what your income will be once you stop working. Will it come from pensions, RRSPs, investments, personal savings, or government benefits such as CPP and OAS? Will it be enough to cover your monthly living expenses and debt repayments without creating additional stress?
Your expenses will likely change as well. You may save money by no longer commuting or paying work-related expenses, but other expenses, such as healthcare, insurance, or home maintenance, may increase. The cost of debt repayment does not decrease because you have retired, and interest continues to accrue. That's why it's time to get a clear picture of what you owe and how you will repay it, preferably before you retire.
Ask yourself: What kind of retirement do I want? If travel, leisure, or supporting your grandchildren are part of the plan, make sure your finances can support that vision. A detailed and flexible retirement plan that includes debt reduction can help align your goals with reality and avoid costly surprises.
If debt is holding you back, it's high time to explore your options. A Licensed Insolvency Trustee (LIT) can assess your situation and propose formal solutions such as a consumer proposal or bankruptcy. These are legal procedures, regulated by the federal government, that can help you reduce or eliminate your debts while protecting your assets.
But above all, remember that you are not alone. Whether you are just starting to plan for retirement or are almost there, help is available. Taking the first step toward financial clarity can lead to a future where your retirement dreams are secure, stress-free, and achievable.
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