As people’s work years draw to a close, many still owe a lot of money.

Most people hope to be debt free by the time they hit retirement, yet many still carry large mortgages, lines of credit and other kinds of consumer debt. According to Statistics Canada, 34 percent of retired people over 55 are still carrying debt, while a 2017 Equifax Canada report found seniors are increasing their debt loads at a much faster pace than other Canadians.

“That’s a problem for people who can’t keep up with their debt load and are forced to curtail their retirement dreams,” says Duane Bentley, Investors Group Vice-President of Banking and Mortgage Distribution.

Money pressures

There are several reasons why seniors are still in debt. One is because they’re still paying for their children, especially when it comes to housing. According to a 2015 survey, 18 percent of first time homebuyers have their down payment paid through a gift from a relative – usually a parent.

Many young retirees are also caring for aging parents and that comes with both a financial cost and a time commitment, says Bentley.

Less aversion to debt

For many, debt is just part of the plan. According to a 2014 Investors Group survey, 27 percent of high net worth Canadians plan to have mortgages while retired – and 67 percent who have mortgages say they have the cash to pay them off in full.

Part of the reason for this is that many Boomers are used to debt – they’ve been borrowing money for decades – and with low interest rates, they don’t see the need to pay off their house before they retire.

“In some cases, they’re being strategic” says Bentley. “They may use a mortgage to acquire a second property without drawing down on their retirement savings. That can be a good strategy, as withdrawing other assets, such as money from an RRSP, would trigger tax implications.”

But it’s a risky one. If you’re making less money in retirement, you could have trouble paying your debts back, in the event interest rates rise.

Boomers need to manage their financial situation carefully, as debt problems could force them to sell their home or compromise other plans.

Pay attention to debt load

Boomers need to manage their financial situation carefully, as debt problems could force them to sell their home or compromise other plans.

“If your debt is out of control, if you’re spending more cash to service your debt, you won’t be able to live the retirement you had wanted,” says Bentley.

One way to alleviate some of the debt burden is to restructure your debt.

“It won’t reduce your overall debt, but you’ll likely achieve a more attractive interest rate and free up more monthly cash flow,” says Bentley. The money you save in interest can be used to more aggressively pay down your debts.

“It’s also important to create a budget that helps you reduce spending, free up money for debt repayment and allows you to plan for the future,” he says.

If you do find yourself nearing retirement and buried under a mountain of debt, you’ll need to get things under control today.

Once you do retire, you want to enjoy your life and not worry about your bank account.