How to Reach Retirement with Simple Debt Relief OptionsNov 07, 2018
Knowing your options for debt relief is important to every generation, but especially for baby boomers and seniors. According to our Affordability Index survey, one-in-five 55-and-older Canadians told us they put off retiring at the age they thought they would because they simply couldn’t afford it.
If lack of affordability is keeping you from retiring when you want, chances are good that your debt load and/or your lack of retirement savings are to blame. Reducing your debt — especially any high-interest consumer debt — can help you get to a place where you can afford to retire and relax.
Our Index results revealed that very few Canadians under 55 think they have it better than boomers and seniors when it comes to affordability, savings and debt.
The perception may be that people over the age of 55 have fewer financial responsibilities than the generations behind them. The mortgage is paid off, the kids are grown and independent and your retirement savings is well padded.
The truth is, many boomers and seniors are still overburdened. They may be supporting adult children or contributing heavily to their adult children’s households in order to help with grandchildren.
We found that 45 per cent of boomers and seniors see retiring at age 65 as a need. Unfortunately, 60 per cent find saving for retirement to be very challenging.
While three-quarters of those aged 55 and over see saving for retirement as necessary, they’re having a hard time doing so. Although it gets easier the higher the income bracket, a full 55 per cent of those making over $100,000 a year still find saving for retirement very challenging.
Helping adult children vs. saving for retirement
What’s going on to prevent Canadians from retiring when they planned to do so? Affordability is one issue.
Although they’re less likely to see helping adult kids as a key financial challenge, three-in-10 Canadians over the age of 55 are challenged by the need to help their children. Some are forking out more than they can afford to make sure their grandchildren have everything they need.
If that’s you, check out this article on how to avoid back-to-school debt with the grandchildren.
Affordability is the main reason boomers’ adult children are still living at home. Seven-in-10 Canadians with adult children living with them say it’s unlikely that their kids will be moving out within the next year because they can’t afford to buy or even rent a place.
Consumer debt can also be an issue. Servicing debt takes money that could be used to build up retirement savings so people can achieve their goals in a more timely manner. That’s where simple debt relief options can make a real difference.
Getting help with debt
If personal debt is one of the things keeping you from being able to retire, know that there are ways to reduce it. Simple options include:
- Talking to a Licensed Insolvency Trustee (LIT). An LIT will walk you through all the debt relief options so you can decide what’s right for you. You may be able to handle your debt on your own with a solid budget or a debt consolidation loan.
There are also formal options for reducing debt, such as credit counselling, a consumer proposal and filing for bankruptcy. An LIT is the only debt professional who can file a consumer proposal or bankruptcy for you.
- Finding tools that work for you. There are plenty of online calculators, resources, videos and information to help you improve your financial literacy and get a firmer hold on your finances.
The Financial Consumer Agency of Canada is one place to start (they also have a wide range of great financial literacy resources for you and your family).
- Developing a strategy to deal with debt. Having a strategy for attacking debt is key to reducing it. The debt snowball and the debt avalanche are two ideas that can help you lessen and even eliminate debt so you can finally retire.
If you want to retire but can’t, consider implementing some simple debt relief options to help you reduce your debt and boost your savings. It takes some effort but your retirement will be more than worth it.
Did you know that November is Financial Literacy Month (FLM)? It’s a great time to get in on the conversation and brush up on your financial knowledge.