Are you on track for a debt-free retirement?
Retired Canadians may be holding a bit less debt than the rest of Canada, but they’re also taking fewer measures to pay it off, according to a recent CIBC survey.
Paying off the house has always been a strong part of any family money management plan since, for most people, the mortgage is an enormous debt that hangs over them -- forever, it seems, according to some commentators.
Nearly 60% of retired Canadians hold some form of debt, compared to 76% for those still working. However, only 27% of retirees said they've made an extra lump sum payment toward their mortgage debt in the past 12 months — compared to the national average of 42% for non-retired Canadians.
Since it's not deductible as it is in the US, debt carried into retirement can put a real strain on cash flow, as the monthly payments must come from pension earnings or from retirement savings — both of which were intended to serve as retirement income.
“These poll results clearly illustrate the importance of having a good debt repayment strategy in all phases of life, particularly as you approach retirement,” said CIBC executive VP Christina Kramer.
“While it’s a good sign to see that Canadians have made some progress on debt reduction entering retirement, it’s also clear that once you retire with debt, it can be harder to pay off your outstanding balances.”
Do you hope to be debt-free by the time you retire? If not, what percentage of your retirement income do you expect to devote to paying things off?
By Gordon Powers, MSN Money
Posted by: Al-Man | Jul 24, 2021 1:05:52 PM
I plan on retiring next year. I won't have much debt but still in the neighborhood of $100,000. I will put apprx 50% of my retirement income towards the debt and I should have it paid off in about 7 yrs.
I will live within my means, buy many of the things I need used, try and live as self sufficiently as I can and the money will stretch really far. I should be debt free on my 48th birthday. Then I can do all the things I wish.
Being debt free is something that has to be worked at. It is something that has to be planned a long, LONG time in advance. You have to be fiscally disciplined and know what is a need over what is a don't need.
Planning is the key.
Posted by: Bill | Jul 24, 2021 11:01:06 PM
I am debt free now, therefore will be when I retire.
Posted by: Mississauga Dad | Jul 25, 2021 12:49:55 AM
I am a single father of two teenage boys - I get, and got, nothing from their mother in terms of support, nothing from the government - not even any tax breaks. I am hundreds of thousands of dollars in debt after suffering through the abuse and harassment of the family courts for years.
My ex cost me tens of thousands of dollars in litigation in order that she obtain sole custody and residency of our children. Once she had done so, and had received all of the 'financial perks' that the courts award to single mothers as 'primary caregivers', (perks that came out of my pocket of course), she decided that she couldn't look after the children after all and shortly after winning her windfall, phoned me and said the boys and their possessions were waiting in her porch so please come and get them. They have been with me fulltime for all the years since.
I have spent additional thousands of dollars in expenses making sure that the boys see their mother every weekend, during all holidays, for at least half of each summer, and for any other time either they or she desires. In all the hundreds and hundreds of times the boys have been to visit and/or stay with her she has NEVER picked up or driven the boys or paid for their bus or train fares. Yet when the boys with living with her she made no effort to, and in fact impeded in every way possible, any attempts for me to spend time with them. And if I was fortunate enough to get any time I, again, picked up all the expenses. She absolutely refused to drive the boys to or from my home.
The boys' university education is already looked after because of a Trust Fund that I set up solely and totally with money I earned. She never contributed a cent to the fund but I was not given any kind of "credit" for my contributions during divorce proceedings - in fact she did everything she could to try to wrest control of the fund into the hands of her and her father.
I will never be able to retire - I am in my late fifties now - I will have to work until I drop dead in order to have any chance of paying all of my debts - debts that were mandated by the systemic hatred, harassment, abuse, and discrimination routinely and knowingly inflicted on fathers by the socialist feminazi family court system.
And my ex? She's living in a nice, large condo in downtown Toronto. She doesn't work - she lives off the money the courts stole from me to give to her.
Posted by: Jenn | Jul 25, 2021 8:48:35 AM
I'm truly sorry that you got such a raw deal and I definitely empathize with you but I can say from the standpoint of a single mother I've had it pretty rough, too. I don't know what perks you speak of; I would have loved to have gotten some perks. I have also had to pay thousands in legal fees. Without going into much detail I can say with all honesty our stories are eerily similar. At the end of the day, all that matters is that you have done what you can for your children. I have no doubt you are a wonderful father. You deserve a break. You say your children are teenagers. There's no harm in holding them accountable for some of their own expenses.
Posted by: J | Jul 25, 2021 11:16:51 AM
As a reader who tries to read all the articles I can about retirement; I must confess some confusion? My spouse and I will have our home paid for by the time we retire. And like the commenters above we were both single parents; who raised our children without support from another spouse, and paid thousands in travel, activity and legal fees etc, etc, etc, while working just above entry level jobs. We simply sucked it up and moved on! However, my confusion on the fear of paying off debt before retirement arises upon the realization we all will have "debt" into retirement. As a home "owner" we still have the expense (debt) of property taxes, or should we down size the regular payments (debt) of condo fees, or should we decide to liquidate our property we will still have to pay rent. And, we will also have the expense of an auto (since we live in a rural - remote) community. In conclusion, I feel these "retirememt" "debt" articles should focus more on retirement expenses and expectations and not emphasize the 4 letter D-E-B-T word!
Posted by: GenXer | Jul 25, 2021 12:59:26 PM
We will definitely be debt free when we retire no matter what life throws at us. We have had good times and bad financially speaking and the worst times were because we took on too many financial commitments. Most recently one of us left their job and is now home re-training for a whole new career. Life has a funny way of throwing things at you that you don't expect. One thing i learned in the last year is the value of an emergency fund. It wasn't huge ($10K), but having that cash sitting there has helped us greatly weather this surprise work change.
We will be mortgage free in about 11 years in our early 50's. We also have 2 sons to support through university and they will contribute some so that they understand the value of money.
I read every day about retirement planning, financial planning etc. and watch as many shows on tv about it as i can (Til Debt due us Part is great). This helps to keep me focused on our long term goals and to resist the many 'toys' that are all around us. Having a bi-weekly automated transfer from my salary to my RRSP at work also means i pay myself first which is key. My sons often watch the shows with me so they are slowly learning about the pitfalls of getting into debt etc. I sure hope it helps them when they are older.
Finally, i really sympathize with the single father and single mother that posted. That must be horrible. Good for you for taking care of your children. Hang in there, you both deserve a good break to come your way.
Posted by: TK | Jul 25, 2021 3:39:24 PM
Retirement expenses aren't 'debt' anymore than they are while you're working. You have to live but you don't borrow to eat. Most of the people I know waited until things were paid off before looking at retiring. For some that means age 60 or so although a few will likely never get there.