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Wealth management

Retire debt-free: is it possible?

June 28, 2023

Ahh, retirement. The moment you’ve been looking forward to for years. You finally get to do what you want to do—as long as you’ve planned for it!

For many people, retirement means fewer family responsibilities: the kids have left home, the mortgage has been paid off or just about… But that’s far from reality for many of you. No matter what your situation though, you can still achieve a debt-free retirement.

Here are 5 things you can do right now to give you the financial flexibility you need to reach your retirement goals and achieve peace of mind.

1. Consolidate your debts

If paying off all your debts before you retire seems impossible, start by taking a full inventory and try to consolidate them into one. This solution makes it easier to stay on top of your recurring expenses and manage your payments.

You could also reduce the amount of your payments as well as your monthly interest fees, if your situation allows for a lower-interest financing solution.

2. Leverage the value of your home

If your mortgage is fully or almost paid off, then you have equity in your home. That means you may be able to get a secured loan against the value of your home. You could get a lower interest rate to pay off your debts or achieve your goals, now or when you retire. Talk to your advisor to learn about the best options for you.

Don’t lose a grip on your savings habits

With property values increasing, the net value of your property could amount to funding opportunities for many projects. If you have available equity in your home, you should plan to pay off your mortgage before you retire. If you’re not able to pay it off, make sure you include your mortgage payment in your retirement budget. You don’t want to hinder your retirement plans. That’s why it’s important to keep making savings your #1 priority.

3. Make smart use of credit tools

Be wary of credit card and deferred payment offers. With the often high interest rates, this type of financing can be an obstacle to achieving your retirement goals if you aren’t able to pay the balance at the end of the month.

Need a new car? Want to buy a motor home or renovate your kitchen? Talk to an advisor to find out the best financing options for your situation.

4. Plan your retirement if you haven’t already

Meet with an advisor who will analyze your financial situation and help you develop a retirement budget. You’ll find out if you’ll have enough retirement income to pay off your debts—that’s if you still have any when you retire—and enjoy the lifestyle you want.

This way, you can plan what you want to do when you retire along with major expenses (like redoing your roof or getting a new car) by including them in your budget so you don’t take on new debt in retirement.

5. Set achievable goals

If you want to retire debt-free, you need to consider your financial capacity and maybe even review your financial objectives so you can achieve your goal. Depending on how much debt you have right now and your ability to repay it, implement a realistic action plan that you can monitor periodically.

This will allow you to gradually reduce your debt, identify any needed financial adjustments and tighten up your expenses, to help you get into the regular habit of making debt payments. Having a plan will help you achieve your goals, while also developing the savings habit.


  1. Do your best to use any extra income (like a tax refund or bonus) to reduce your debts and boost your savings. Feel free to contact your advisor if you need help making a budget and if you want to explore the various options available to you.
  2. Once you’ve paid off your mortgage, put your monthly mortgage payment amount in your retirement savings.
  3. Don’t take money out of your RRSP to pay your debts. The withdrawn amount is considered taxable income and could significantly affect your tax return, because tax is withheld when you make an RRSP withdrawal. This may even be the case if the amount of tax withheld isn’t sufficient compared to your total income when you file your tax return. If you dip into your retirement savings now, you may jeopardize your retirement goals later on.

Retiring debt-free isn’t easy! But it’s not impossible, as long as you have an action plan: review your priorities, reduce or eliminate certain expenses in your budget, postpone your retirement, keep working part-time for a while or review your retirement goals.

Keep in mind that planning is the key to success! Implementing your retirement plan with your advisor as soon as possible will give you more options and allow you to course-correct your strategy as needed. That way, you’ll be better prepared and equipped to achieve a debt-free retirement.