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