Mortgages and Debt in Retirement - Something to think about

Mortgages and debt in retirement – something to think about

 
 Earlier this week, CIBC released the results of a poll conducted by Harris-Decima concerning the baby boomer generation and their level of debt. This is our largest demographic and approximately 46% of Canadians aged 45-64 are still paying on a mortgage, while at least 75% of those interviewed still have some form of consumer debt. Of those interviewed, 42% say this is a hindrance to their financial and retirement goals – nothing unexpected there.

 

 

This is really something to think about. For most, having debt is like an elephant in the room. From the outside, no one really knows your situation, but in your mind it may be all your thinking about – balances, missed payments, minimum payments, etc. 

If that’s what you’re facing in retirement, isn’t it worth questioning what there is to look forward to? Sure, if you have a job that you truly love and don’t consider it a job and you want to work to your deathbed, then that’s fine. But if you’re working because it keeps the wolves from the door, who wants to be working until death and no time (or money) to enjoy the golden years? If you retire and you have a mortgage, which is bad enough, or even worse –lines of credit and credit cards at outrageous interest rates, how can that be relaxing? It’s crazy because as a mortgage professional we see people of all ages with all types and levels of debt.  

Since mortgages are my thing I want to elaborate. The cause of boomers carrying this debt into retirement may quite possibly be facilitated by banks clever marketing and sales pitches, but in many cases it’s due to their advisor not looking at their whole financial picture. 

It’s easy for brokers to look at each client as just a deal, a paycheck. However, each client needs to be handled differently as there is no mortgage or plan that suits everyone. As Peter Kinch (a mortgage professional and author with Dominion Lending Centres) puts it in a blog of his, there’s a difference between portfolio lending and transactional lending, and portfolio lending leads to a more sustainable future for a broker and a more customized plan for the client.

There is more to a mortgage than just a rate. Things like terms, amortizations, home equity lines of credit, and prepayment options all play a factor. This is where the mortgage professional needs to evaluate each client in terms of their current needs and situation, as well as their ultimate goals. This way, the move that they make this time around will have the next move in the back of their mind. It’s no good when it’s too late.

Time is of the essence and by planning for these things up front you can avoid situations like this, and we all know you can’t turn back time.  As the old saying goes, if you fail to plan you plan to fail.

Daniella Aitken

Daniella Aitken

Sales Representative
CENTURY 21 Miller Real Estate Ltd., Brokerage*
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