How to Talk to Your Partner about Debt in RetirementFeb 13, 2018
When is the last time you and your significant other talked about your debt load?
It’s said that the key to a healthy relationship is good communication. But, sometimes talking about finances (and especially debt) is difficult.
Our recent poll about relationships and money found that Canadians, 55 and older, aren’t discussing money with their spouse or partner nearly enough. A shocking 45 per cent confess they rarely or never broach the topic of personal finances.
The problem is, not talking can lead to financial problems that might impact the security of your retirement. Here are some ways to start the conversation.
Talking about money
For couples in this age in this age group that haven’t retired yet, open communication about how to reduce your debt and prepare for retirement is important.
Add regular money discussions to your list of financial and relationship goals this year. Having honest conversations about topics like your debt and your retirement plans can set you up for a more secure retirement.
Important questions you should ask before and during retirement:
- What is your current debt load (individually and as a couple)?
- Is your mortgage paid off?
- What is (or will be) your retirement income? Calculate what you can expect from CPP, OAS, Employer pensions, RRSPs, TFSAs, and other investments. Remember to subtract any penalties, fees, or taxes that will be taken off of your money.
- What kind of retirement do you want?
- How and where do you want to live? Will you downsize, seek a retirement community, assisted living, or travel?
- What comforts are most important to you? Consider things like your living space, cable and other entertainment services and transportation costs.
- Do you have any health concerns or costs to consider like high prescription or treatment costs?
- How will you manage if there are cost increases, or unexpected bills? An emergency fund can help you avoid taking on debt.
- Will you be financially assisting other family members?
Here’s the link to The Financial Consumer Agency of Canada’s retirement planning page. It can help you consider expenses, incomes, and other considerations to calculate the costs of the retirement you want.
Pay down your debt
If possible, it’s best to be debt free in retirement. If you can reduce your debt before you retire, you can eliminate the burden of payments when your income is lower. You will also be facing some unknowns in retirement, such as health costs.
If you think you’ll have trouble paying off all of your individual debts in time for retirement, or that your debt will prevent you from saving for retirement, review your options for debt relief. Speak with a professional about viable solutions to make debt repayment quicker.
Here are some tips from My Money Coach on preparing for retirement and eliminating debt.
Reducing your debt before you and your partner enter retirement can save you from stress and financial problems in the future.