How to Deal with Financial Trouble in Retirement
Q: We retired 5 years ago at the age of 60 without financial problems or a lot of debt, and things were going okay until the recession. Our RRSP’s took a pretty big hit and we shifted our money into low yield but safe investments. We should have reduced our annual RRSP withdrawals but didn’t. We own our townhouse but owe $30,000 on our line of credit. We’re worried we’ll run out of money in 10 years; we need help!
A: The past 4 years have been very difficult on people who like you, depend on their RRSP’s to fund their retirement. You will need to make some changes and decisions to get your retirement plan back on track. Here are some things you can do to get you started:
Review Your Investments
Meet with your financial planner to re-evaluate your investment portfolio. Being cautious with your retirement funds is smart; being overly cautious means living on a lot less each year. Find the right balance to provide you with enough money to meet your needs and give you peace of mind.
Consider Your Budget
Take a hard look at your budget with a goal to cut your expenses in order to live within your revised retirement income. If you are not sure where to start, I encourage you to meet with one of our Counsellors for help.
Make Credit Harder to Access
Disconnect your line of credit from your ATM card; it’s a lot easier to avoid using credit if you don’t have easy access to it. Before you retired, paying debt down may have been easier. However, in retirement, the golden rule is to only use credit for safety and convenience; never carry a balance.
Put Your Experience to Work
Consider going back to work on a part-time basis with a goal of paying off your line of credit in 3 years time or less. Experience is one thing you can’t get at school and is always in high demand by employers. Once this is done, consider working 1 – 2 more years to build up your savings to manage large ticket or unexpected expenses.
Help Your Family Help Themselves
If you are helping your adult children financially, it is time to help them understand the changes you will need to make so that you can enjoy your golden years. Helping your kids learn from the actions you are taking will better prepare them for their own retirement, which will come sooner than they think.
Getting Back on Track is Golden
Taking action instead of worrying about your financial situation and debt problems will get your retirement back on track and make your golden years truly golden.