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The over-40 plus crowd are increasingly using debt to fund exotic vacations, bigger homes and weddings for the kids, but that doesn’t bode well for their retirement future.

Unfortunately debt accumulation doesn’t show any signs of slowing as age creeps higher. According to research by HomEquity Bank and Equifax Canada, the average mortgage balance for Canadians aged 55+ grew by 11 percent over the past two years from $158,000 to $176,000. The same report shows total debt levels among those aged 70+ has increased 12 percent during the same period.

What’s troubling is that many people end up getting in over their heads and are unable to service the debt. The result is a retirement that’s a far cry from what had been envisioned.

Instead of downsizing as they age, people are buying second properties and travelling when they can’t afford it. One or the other may be manageable, but some are trying to do it all. They want what they see on TV.

A sample case of a couple who want to keep up appearances, but in doing so risk losing everything:

  • They have a modest retirement income goal of $45,000 a year and $300,000 of registered assets to draw down on.

  • Yet they have a $400,000 home with a $300,000 mortgage.

  • They’re paying $14,000 a year just to service that debt.

  • At the current rate of expenditure, they’ll quickly run out money and a small interest rate hike could be catastrophic.

While the majority of Canadians (63 percent) say debt reduction is their top financial priority, eight in ten don’t think they have the know-how to stick to their financial strategy, says a recent study by the international Financial Planning Standards Board and the Canadian Financial Planning Standards Council.

Canadians don’t have to go it alone – don’t feel you have to navigate the complexities of your financial future unaided. There are experts who can help identify goals and assist in developing strategies to make them happen. We turn to specialists to fix our cars; we turn to professionals to aid our health – we shouldn’t be afraid or embarrassed to turn to experts in financial planning to fix our path to financial confidence. Retirement dreams don’t have to become pipe dreams.

Discipline is what it takes to block out the noise, commitment is what it takes to walk the path to financial success and patience is what it takes to reach the goal.

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