In a perfect world, all of your personal debts (including mortgages, credit cards, car payments, personal loans, lines of credit, etc.) would be fully paid off before you retire. This is generally considered ‘best practice’ because upon retirement, we rely on subsidized income (such as retirement savings, workplace pensions, RRSPs, CPP) for our living expenses. Keeping up with minimum payments and paying off debt can become difficult on this reduced level of income.
Of course, this isn’t a perfect world, and retiring with some debt to your name is usually inevitable. In such cases, debt consolidation in Hamilton can help you arrange a manageable payment schedule for your debts, potentially saving you from having to work a few more years to completely pay off all of your debts.
The Facts on Retirement and Debt
According to a recent CIBC poll, nearly 60% of retired Canadians hold some form of debt, and the number of seniors who are filing for Bankruptcy has been climbing steadily. Financial analysts predict that this number will continue to rise in the future, as more and more seniors carry debt into retirement, and outlive their personal savings. Fortunately, there are a number of debt management solutions and strategies that can help potential pensioners manage their debts, allowing them to retire as planned without the interference of debt during their golden years.
The Most Important Debts to Take Care of Before Retirement
The debts that have the greatest potential impact on your retirement plans are those with the highest interest rates. For that reason, it is highly advisable to focus on paying down your high-interest credit cards first, and as soon as possible. That way, if you do have to carry debt into retirement, it will be the debt with lower interest rates and more manageable monthly payment amounts.
Consider Debt Consolidation for Your Remaining Debts
If you have some outstanding debts—particularly if they’re high-interest debts like credit cards—be sure to consider debt consolidation. Consolidation won’t eliminate your debts, but it will minimize interest and offer more manageable payment terms, which will ease the financial pressure of retirement.
Of course, there are other options available, to manage your debt as you approach or live out retirement. Your Licensed Insolvency Trustee will review alternatives like credit counselling, Consumer Proposals, or Bankruptcy, to help you find the option that is best for you.
To learn more about how debt consolidation – or any other debt management solution – can help you retire on-time with manageable payments and peace-of-mind, call today for a free consultation. With offices in Toronto and Hamilton, our team is here to help you get a fresh start and lead a FULLER life.