27 May Retiring Your Debt Before You Retire
According to a recent survey, a quarter of Canadians retire with debt in their golden years. From credit card debt to mortgage payments, retirees today can be faced with a list of expenses in life after work if they don’t have a retirement plan in place. There are a few things to consider when planning for financial security in your retirement.
As life expectancy in Canada continues to rise, it is important to factor this into your investment and retirement planning.
With longer life expectancy, the bigger allocation of equities becomes appropriate in your financial benchmark. If you set financial goals to meet a longer life expectancy, you’ll have more peace of mind and a better quality of life during retirement.
Prioritizing your debt
Before you retire, you should try to settle as much debt as possible. Credit card debt should be a top priority, due to the high rates and revolving balance.
Then look to debts with fixed rates and payments, such as a mortgage or car loans. Those are more predictable (and therefore easier to plan for as part of a retirement budget), but can still be worth chipping away at so you have one less expense in retirement. Be mindful of offering financial assistance to your adult children, unless you can truly afford to do so – co-signing loans could risk your own retirement.
With compound interest, the earlier you start investing, the more time your nest egg will have to grow. If you’re 20 years’ old and save 20 per cent of your income, then debt-free retirement at 50 could be possible – depending on the lifestyle you envision in your retirement years.
If you aren’t in a position to invest early, you’ll need to invest a higher percentage of your income as soon as you’re able to, and also select investments wisely to ensure they offer consistent returns.
Connect with one of Genus’ retirement investment experts today to get the help you need to prepare for retirement on 1-800-668-7366.
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