Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
adam@debtcliniccanada.ca (905) 970-0439
Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
(905) 970-0439 adam@debtcliniccanada.ca
Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
(905) 970-0439 adam@debtcliniccanada.ca
Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
(905) 970-0439 adam@debtcliniccanada.ca

February 2015 – DO NOT RETIRE WITH TON OF DEBTS

By:Adam Aspilla
February 25, 2015

Many people are looking forward to their retirement to enjoy life. They plan to travel to different places to relax, without worries and stress to wake up early going to work. 

Yes, it is true retirement is a time to travel and relax for those who will retire with enough retirement saving/investment to supplement their pensions (CPP and Old Age Security). 

However, for those who do not have or little saving/investment at their retirement and dependent only on their Canada Pension Plan and Old Age Security, they would be living a much stressful life especially when they retire with ton of debts.

Many who retired without sufficient saving/investment are now living in a hand to mouth existence for their pensions are not enough to cover their basic living expenses. Much more if they still have outstanding debts incurred prior to their retirements.

A good example is a retired couple without savings/investment. Just before their retirements they purchased a brand new car on credit. They have outstanding credit card debts of about $50,000.00. 

They rented an apartment and their combined pension is less than $2,500.00 a month. Less apartment rental, utilities, food, car payment, they have nothing left to pay for their credit card debts. Bankruptcy was their only option. Despite filing bankruptcy, still their pension is not enough to cover all their basic expenses. They were behind on their payments, thus, the bank seized the car. 

Their dreams to travel to different places and to relax vanished away. They are in a bad financial situation that they did not experience during their working days. They tried to ask help from their children, but their children do not have surplus income to permanently subsidize their financial needs. 

Today, there are many retirees especially in our community who retired without much saving/investment for during their working days they failed to save/invest as their extra income was spent to buy non-essential items and yearly vacations to the Philippines.  They thought that their pensions when they retire would be enough for their living and travelling expenses.

Unfortunately, pension income is only about 50% (even less) of your regular net income before retirement, depending on how much you have contributed on your Canada Pension Plan. Though there is an Income Supplement for those without or small CPP, the amount of the Income Supplement is just enough to cover the deficiency to meet the minimum income required for your basic needs.

To realize your dream of travelling to other places and to relax when you retire, plan your retirement. That is – you have to calculate how much CPP and Old Age Security Pensions you can get at the time you retire, and how much money you need at your retirement for you to realize your retirement dreams. Then, save/invest to cover the deference between your CPP, Old Age Security income and the amount you need to enjoy retirement.

Most importantly, do not retire with ton of debts – otherwise, your saving/investment is reduced to nothing for it would be wiped out to pay your outstanding debts.

Adam Aspilla operates the Debt Clinic of Canada Inc. for more than 30 years.  He was a former financial planner, a former mortgage broker, and the author of the book, You Can Negotiate All Your Debts.  He also writes another column, “Biblical Perspectives” in this paper. For a free initial, expert, professional and confidential financial consultation on your financial issues like: Debt Consolidation, Credit Counseling, Consumer Proposal, Bankruptcy, and securing 1st and 2nd Mortgages, call 905-970-0439 or visit www.debtcliniccanada.ca

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