The old rule that you must retire without debt no longer applies. More people are waiting until later in life to buy a home, so many couples today can expect to retire with a mortgage. The good news is there are ways to mitigate the financial impact of this expense on your golden years.
Here are some tips for retiring with a mortgage.
TRY TO SAVE
Don’t focus on using all your money to pay down your mortgage, especially if the extra payments won’t make much of a difference to your overall debt. You’re better off putting financial windfalls, such as tax refunds or other savings you can muster up, into a registered retirement savings plan (RRSP) or tax-free savings account (TFSA).
LOWER EXPECTATIONS
Today’s housing market makes it financially burdensome to own a home. Your parents may have a large house and yard, but big homes are now beyond many people’s reach.
If you’re planning to carry your mortgage into retirement, be realistic about what type of property you can afford and determine what you really need. Aiming lower might help you avoid costly payments.
RENT OUT SPACE
If you live in a large home and the kids have grown and moved out, you may have some extra living space you can monetize. Renting out a basement apartment, for example, can allow you to make your mortgage payments without dipping into your savings.
CONSIDER DOWNSIZING
You may want to consider ditching your mortgage entirely. Selling your home in favour of renting might free up money you could use to travel, pursue your hobbies or help your children.
Alternatively, selling your home in exchange for something smaller and more affordable can reduce your mortgage payments and free up some cash
MINIMIZE YOUR OTHER DEBTS
Car payments, credit card debt and lines of credit can all add up to a crippling monthly expense that you don’t need while you’re also paying down a mortgage.
Debt consolidation is one way of tackling your other debts. This involves acquiring a loan so that you pay numerous creditors off at once and are left with a single monthly payment. Often these loans will give you a lower interest rate than if you were to pay off your debts individually.
In addition, if your debts have spiralled to the point where creditors are calling, a licensed insolvency trustee can help file a consumer proposal to ensure you can get back on your feet quickly.
DEBT HELP IN OTTAWA AND THE SURROUNDING AREA
At D. & A. MacLeod Company Ltd., our licensed insolvency trustees can provide you with the debt consolidation, consumer proposal and credit counselling assistance you need to get your debt under control and retire with financial freedom. To schedule a free consultation, contact us today.