Retirement Debt

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
Post Reply

If you are retired do you carry any debt.

Yes
3
4%
No
61
88%
Voluntary
5
7%
 
Total votes: 69

User avatar
CROCKD
Veteran Contributor
Veteran Contributor
Posts: 3343
Joined: 15 Aug 2008 16:59
Location: GTA

Retirement Debt

Post by CROCKD »

This article got me thinking about the FWF community.
I figure FWF members are not typical of this demographic.

Most retired Canadians carry some debt, poll finds

The attached poll attempts to capture this.

If you are retired do you carry any debt.

Voluntary means you do but could afford to pay it all off any time you wanted but you have a financial management reason for carrying it.
Monthly credit card balances do not count if they are ordinarily paid off each month.
" A verbal contract isn't worth the paper it is written on " Samuel Goldwyn
"The light at the end of the tunnel may be a freight train coming your way" Metallica - No Leaf Clover
User avatar
Zipper
Contributor
Contributor
Posts: 658
Joined: 10 Aug 2005 16:36
Location: London ON

Re: Retirement Debt

Post by Zipper »

We have absolutely no debt, own our home, and have an Equifax FICO score of 845 as of 2011 02.
User avatar
stardancer
Contributor
Contributor
Posts: 202
Joined: 08 May 2009 21:01

Re: Retirement Debt

Post by stardancer »

I can't imagine being retired and having debt. In fact, my retirement gift to myself was a brand new car (in 2005) and we wrote a cheque for the full amount.

Things keep coming up in retirement, just as they do during your working life. It's nice to have the option of paying for them or not.
User avatar
newguy
Veteran Contributor
Veteran Contributor
Posts: 8088
Joined: 10 May 2009 18:24
Location: Montreal

Re: Retirement Debt

Post by newguy »

I have no debt but I won't know if I'm currently retired or unemployed until I'm 65.

newguy
Jo Anne
Veteran Contributor
Veteran Contributor
Posts: 3648
Joined: 19 Feb 2005 21:33

Re: Retirement Debt

Post by Jo Anne »

We have absolutely no debt, own our home, and have an Equifax FICO score of 845 as of 2011 02.
We have zero debt, own our home, and I neither know nor care what my credit score is.
BRIAN5000
Veteran Contributor
Veteran Contributor
Posts: 9064
Joined: 08 Jun 2007 23:27

Re: Retirement Debt

Post by BRIAN5000 »

I'm retired, wife still works we have no debt at the moment. I have a substantial amount of margin and a large LOC, if we're going to make it to the 99th percentile I'm going to have to load up on debt. :o My timing has never been good, maybe this time, just one time, off to poker now.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
j831robert
Contributor
Contributor
Posts: 752
Joined: 01 May 2005 14:12
Location: SW Ontario

Re: Retirement Debt

Post by j831robert »

Retired since 1987 - absolutely no debt. Actually, we have used our LofCs as a source of funds for purchase of Canadian investments for many years but always with the proviseo that we have the cash to fully cover in a high interest account somewhere. Rightly or wrongly I have always believed that this practice (which permits all interest charges claimable comes tax time) represents one of the few real perks left for we members of the great unwashed !
HardWorker
Veteran Contributor
Veteran Contributor
Posts: 2564
Joined: 31 Dec 2006 10:49
Location: Southern Ontario

Re: Retirement Debt

Post by HardWorker »

The article and survey don't carry much weight if they don't distinguish between good and bad debt.

To me, they're alluding to consumer debt, and I wonder if the banks are worried about massive write downs?
User avatar
westinvest
Contributor
Contributor
Posts: 898
Joined: 22 Feb 2005 01:17
Location: Okanagan

Re: Retirement Debt

Post by westinvest »

An example of voluntary debt: my wife bought a Honda Fit, and the dealership was advertizing 0.9% financing for 4 years. We tried several times to obtain a discount on the purchase price in lieu of the low cost financing, but they refused (don't want to set a precedent for discounts),so we invested the funds that would have paid for the car and took the financing for 4 years. The ROI on the investment has been about 3% (GIC rate at the time) so after tax she is ahead of the game - and has helped build her own credit rating.
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: Retirement Debt

Post by kcowan »

Got rid of the small mortgage upon downsizing in 1997.
Retired in 2002.
Got rid of car leasing debt upon selling the BMW convertible in 2005.
Have a rolling CC debt that is paid off each month.
For the fun of it...Keith
User avatar
Nemo2
Veteran Contributor
Veteran Contributor
Posts: 9670
Joined: 02 Jan 2006 14:27
Location: Belleville

Re: Retirement Debt

Post by Nemo2 »

No mortgage...no debt.....charge virtually everything on TD Visa 'Infinite' travel card, and pay it off in full each month.
Exit, pursued by a bear.
William Shakespeare, Stage direction in "The Winter's Tale"
User avatar
Brix
Veteran Contributor
Veteran Contributor
Posts: 3249
Joined: 22 Feb 2005 12:29
Location: Victoria

Re: Retirement Debt

Post by Brix »

Could almost say I've never paid interest charges of any kind, including mortgage interest, but briefly had a credit union auto loan in my early 20s. I suspect the now long-defunct Registered Home Owner Savings Plan, not to mention modest expectations and an obsessively high rate of saving, helped a fair bit.
bekair
Contributor
Contributor
Posts: 136
Joined: 21 Jul 2008 12:32

Re: Retirement Debt

Post by bekair »

Own or home - only rolling M by M - always paid up.

Live below our income - put money aside every month.

Retired for 20 years. Drawing on RIF for 7.

bbt
User avatar
6miths
Contributor
Contributor
Posts: 186
Joined: 21 Jan 2010 00:07

Re: Retirement Debt

Post by 6miths »

Jo Anne wrote:
We have absolutely no debt, own our home, and have an Equifax FICO score of 845 as of 2011 02.
We have zero debt, own our home, and I neither know nor care what my credit score is.
+1
User avatar
Springbok
Veteran Contributor
Veteran Contributor
Posts: 5438
Joined: 22 Mar 2005 16:47

Re: Retirement Debt

Post by Springbok »

No debt here either. Paid off our mortgage 25 years ago. No car or boat loans.

Accumulate about $3 or 4k in CC charges on average, although sometimes more when we do home projects etc. Always pay CC balance off at end of month. We have a margin investment account but almost never use it. Had a HELOC and almost never used it either. Cancelled it because it could affect home insurance cost if deemed a mortgage.

If we were to make a large purchase (car, appliances etc) and vendor offered very low financing cost, it would not bother me to use debt, provided we had investments earning more than the borrowing rate.
Thorn
Contributor
Contributor
Posts: 49
Joined: 07 Aug 2011 15:55

Re: Retirement Debt

Post by Thorn »

I voted "No Debt" as well, with some clarification needed.

We retired 10 years ago with no long-term debt - mortgage- and loan- free.

Now, for short-term debt:

We do use an LOC cheque occasionally but only if we can clear the balance when the cheque clears - sometimes that requires a little planning and perhaps delay in spending.

We do invest but we never borrow to invest. If we see something new we like and have insufficient investment cash, we look to sell some current holdings and use the resulting cash to purchase our new opportunity.

We do use bank credit cards regularly but always pay the bill in full when it comes in.

All of us in the forum have ongoing property and income tax liabilities - these should be paid in full on time.

We are fortunate so far that our income covers our expenses on an ongoing basis, despite some challenges with personal health, children and aging parents.

Best of luck to everyone! Hope you can stay debt- and worry- free!
User avatar
Inquisitive
Contributor
Contributor
Posts: 814
Joined: 18 Feb 2005 22:53

Re: Retirement Debt

Post by Inquisitive »

I was going to vote No until I remembered I now defer my property taxes. It doesn't please me to do this but otherwise the property taxes would come from my savings and that would please me less. This way the taxes will be paid when the house is sold or from my estate. So I think that is voluntary debt.

I don't consider credit card charges to be debt if paid off before due, anymore than my gas bill is.

Inq
User avatar
Springbok
Veteran Contributor
Veteran Contributor
Posts: 5438
Joined: 22 Mar 2005 16:47

Re: Retirement Debt

Post by Springbok »

Inquisitive wrote:I was going to vote No until I remembered I now defer my property taxes.
Inq
I hadn't realized that that was even an option. But Dr Google advises otherwise. It seem that it is not widespread, but in BC quite a good deal:

http://www.nationalpost.com/property+ta ... story.html
User avatar
patriot1
Veteran Contributor
Veteran Contributor
Posts: 4883
Joined: 28 Feb 2005 03:53

Re: Retirement Debt

Post by patriot1 »

HardWorker wrote:The article and survey don't carry much weight if they don't distinguish between good and bad debt.
How much is good debt, i.e. debt used to purchase an asset with better yield than the interest payments? The amount is negligible compared to bad debt I think.

Personally, have had no debt for 20 years (except for some in my margin account in 2009-2010, cleared when I took gains) and it's going to stay that way.
bekair
Contributor
Contributor
Posts: 136
Joined: 21 Jul 2008 12:32

Re: Retirement Debt

Post by bekair »

Springbok wrote:
Inquisitive wrote:I was going to vote No until I remembered I now defer my property taxes.
Inq
I hadn't realized that that was even an option. But Dr Google advises otherwise. It seem that it is not widespread, but in BC quite a good deal:

http://www.nationalpost.com/property+ta ... story.html
I just pay mine - cash every July 4. Live in manufactured home on a REZ, with my BC home owner discount plus the olde duffer discount it's 265 a year (and I like to think of it as our multi million $ Island mansion). :rofl:

bbt
Thorn
Contributor
Contributor
Posts: 49
Joined: 07 Aug 2011 15:55

Re: Retirement Debt

Post by Thorn »

Inquisitive's reply concening deferral of property taxes reminds us once again that some of us are fortunate enough to be able to meet all our bills each month/year, while others need to be more creative in order to have sufficient income to live for the foreseeable future.

Some of us are able to meet our obligations with pensions alone.

Others depend on some deferral of expenses or investment income to supplement their budget. This directly affects investment strategy and related risk management.

We need to think for ourselves and look past trite formulas often touted in the media.
User avatar
CROCKD
Veteran Contributor
Veteran Contributor
Posts: 3343
Joined: 15 Aug 2008 16:59
Location: GTA

Re: Retirement Debt

Post by CROCKD »

Thorn wrote:reminds us once again that some of us are fortunate enough to be able to meet all our bills each month/year, while others need to be more creative in order to have sufficient income to live
+1
" A verbal contract isn't worth the paper it is written on " Samuel Goldwyn
"The light at the end of the tunnel may be a freight train coming your way" Metallica - No Leaf Clover
blonde
Veteran Contributor
Veteran Contributor
Posts: 3250
Joined: 19 Feb 2005 13:43
Location: Calgary area

Re: Retirement Debt

Post by blonde »

As a young Entrepreneur, in my early 20's, I was very aggressive and run into a problem with 'Cash-Flow'. My Grandfather bailed me out and I did learn Big-Time that it is a 'MUST' to live BELOW your Means, ALWAYS.

I never had a mortgage, loan, LOC. To date I have not paid one cent of interest to anyone. Hold clear title to all my properties. Keep some loose change in my pocket to leap onto an Opportunity. Have one CC and pay CC charges each month.

In retirement the lifestyle in our household uses 60-70% of our Cash-Flow.

Our aim in our previous life was to save so much money that it is impossible to spend it all.
Jo Anne wrote:
We have absolutely no debt, own our home, and have an Equifax FICO score of 845 as of 2011 02.
We have zero debt, own our home, and I neither know nor care what my credit score is.


+1...ATTA-Gal Jo Anne
Sometimes the questions are complicated and the answers are simple...Dr Seuss

Be who you are and say what you feel because those who mind don't matter and those who matter don't mind...Dr Seuss
User avatar
patriot1
Veteran Contributor
Veteran Contributor
Posts: 4883
Joined: 28 Feb 2005 03:53

Re: Retirement Debt

Post by patriot1 »

Thorn wrote:Inquisitive's reply concening deferral of property taxes reminds us once again that some of us are fortunate enough to be able to meet all our bills each month/year, while others need to be more creative in order to have sufficient income cash flow to live for the foreseeable future..
OhGreatGuru
Veteran Contributor
Veteran Contributor
Posts: 1361
Joined: 27 Mar 2010 16:01

Re: Retirement Debt

Post by OhGreatGuru »

Not much detail is given on the methodology of the survey, but it may also be including all those people who have mortgages on cash-flow-positive rental properties; plus those who have succumbed to the temptation to invest in securities with borrowed money.
Post Reply