Retirement can be a dream for many Canadians. They get to spend every day pursuing their passions, playing with their grandkids or travelling.
However, the downside of retirement freedom is having to rely on a fixed income. If that income is inadequate, the retirement dream can soon turn into a nightmare. A national survey of Canadians aged 60-plus found that almost half of them have at least one financial concern.
We take a look at the major financial problems of growing older and how to overcome financial problems when you’re a retiree.
So, what are the major financial problems of elderly retirees?
Running out of money in retirement
This is a major financial worry among retirees, according to a recent survey, and is a valid concern: according to the World Economic Forum, some Canadians could outlive their savings by more than 10 years.
This situation could be because of low government pensions, insufficient retirement savings, fewer company pensions and longer life expectancy. Running out of money is certainly one of the key financial problems of old age.
Having too much debt in retirement
This is another of the key financial problems and with good reason. Older Canadians are increasingly retiring with debt. Over half of Canadians aged 60-plus have at least one form of debt and 26% have two or more types of debt.
Even a third of Canadians aged 80-plus are carrying debt. The most common forms of debt are credit cards, lines of credit, conventional mortgages and car loans. These debts can be crippling for many retirees.
Not being able to pay for long-term care
Longer mortality rates bring an increased need for long-term care. Being unable to afford that care is one of the top financial problems of old age according to Canadian retirees.
Long-term care costs can easily outweigh the retirement income of many Canadians. In Ontario, for example, a basic, shared room in a long-term facility costs $1,891 per month; that rises to $2,701 for a private room. While subsidies are available for people with limited resources, the costs can easily devour your retirement income.
Maximizing retirement income
Even after retirement, retirees with considerable savings need to be able to continue to grow their wealth with as little risk as possible.
The balancing act of growing savings sufficiently, while limiting risk, is another of the key financial problems of old age.
Being forced to sell their home
For retirees with few or no retirement savings, their main asset is often their home. Many feel they might be forced to sell their home to help boost their retirement income.
The fear is that they’ll have to move to a much smaller home or one that is considerably further away from their friends, family and the neighbourhood they love.
Finding solutions to overcome the financial problems of old age
If you’ve ever wondered, how can I solve my financial problems in retirement, there are several solutions.
An experienced and trustworthy financial advisor can show you how to get out of financial problems. They’ll be able to suggest the best balance of safe and riskier investments to maximize your investment growth.
Depending on your age, your investment horizon (or time span), could be as much as 30 years. You’ll still have plenty of years to ride out any dips in the stock market. A good advisor will be able to recommend the percentage of your investments to put into stocks, to maximize your potential growth. Bigger savings could help you to overcome financial difficulties.
Keep working or start a business
One in five Canadians works past the age of 60, while over 6% continue working past 80. If you’re wondering how to overcome financial stress in retirement, this is one way you could do it.
You don’t need to continue working for your pre-retirement employer to overcome financial problems. You could choose a part-time job or one that aligns more closely with your interests or hobbies. Starting up your own business in retirement is also another way to overcome financial stress.
How to get out of financial problems by clearing debts
When it comes to overcoming financial problems with debt, there are a number of ways you can do it.
If your debt is getting out of control, you could get help from an accredited debt counsellor. Just be aware that going down the proposal or bankruptcy route will affect your credit score for many years.
Debt consolidation, where you pay off all of your expensive debt with one, lower interest loan, is another way of getting out of financial problems. Just be aware that with some loan options you will still have to make regular debt payments.
Debt payments can have a considerable impact on your retirement income and could mean that, later down the road, you might be looking at how to come out of financial problems once more.
How to overcome financial problems with a reverse mortgage
The CHIP Reverse Mortgage® is an extremely effective way for retirees aged 55-plus to solve their financial problems. With CHIP, you can borrow up to 55% of the equity of your home and use it to not only pay off your existing debts but also to boost your retirement income.
The key advantage of a reverse mortgage is that you don’t have to make any regular monthly payments. You only pay what you owe when you decide to sell or move out. This means you can pay off any existing debts like credit cards and a conventional mortgage and increase your monthly cash flow without impacting your other retirement income.
Call us at 1-866-522-2447 to find out how much money you could borrow to overcome your financial problems.