The end of Work? Are you prepared to retire?

by Brian McIlmoyle on April 21, 2014

retirementCanada has an aging population, The Baby Boomers are heading into retirement. The big question is are they ready?

More and more I am running into people who worked a good job all their lives, had homes, cars, went on vacations, helped put their kids through school, did all the things that they were supposed to do. Except save money for retirement.  A lot of these same people counted on their homes to be their retirement fund, but the allure of low interest home equity lines of credit has resulted in many people drawing down on their equity to fund their lifestyle.

Now facing retirement and a reduced fixed income many Boomers are still faced with mortgage payments and a lot of accumulated unsecured credit card debt. This has driven the average age up of the person using my services either in a bankruptcy or as an administrator of their Consumer proposal. It’s a worrying trend.

Just today I met with a fellow who had just retired to a CPP pension of just over $1000.00. the payment on his vehicle was over $900 a month alone, ours was not an easy conversation. He had done nothing to prepare for retirement, other than hoping it would all work out somehow. Hope won’t pay the bills.  Unfortunately this fellow is going to be making some radical changes to his lifestyle in a very short time. At the end of our conversation, he was in a word, depressed, and angry. Depressed because he is facing a retirement of poverty, and angry because it was his fault that he had not prepared for the transition to retirement.

It does not have to be this way. Dealing with the transition to retirement is something that should be approached proactively. As with most things a solid plan can make all the difference.

As you approach retirement, 10 years out, 5 years out, 2 years out you need to be doing what is necessary to clear the path of obstructions. 10 years out you have enough time to save some money to supplement any pensions you may have. 5 years out you have time to deal with debt, either by paying it down or making a proposal to your creditors to settle your debt. 2 years out, it’s time to downsize and liquidate unneeded assets. Sell the house, buy a smaller one or move into a condo or apartment.  If you take this approach your transition to retirement can be smooth and painless. If you don’t you will probably end up depressed and angry like the fellow I saw today.

Too much debt is a large barrier to easing into retirement. Debt can make your retirement a pretty bleak prospect. It can even force you to remain in the workforce for longer than you want to or longer than you should for health sake.  Debt needs to be dealt with early in your transition process as once you are on a fixed reduced income minimum payments you could handle before will be come a heavy burden.  If you can’t get ahead of the debt you may need the help of a trustee to assist you in restructuring your debt.  Bankruptcy, of course is the most extreme solution, often what is needed is a Consumer Proposal to permit you to fix the amount to be paid without interest and pay it off on a schedule you can afford.

A visit to a trustee may be a key part of your transition into retirement.

If you want to discuss your options call me at 905 848 3649 for a free no obligation consultation.


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