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, says Dr. Lee Anne Davies, CEO of Agenomics in Vancouver, B.C. and co-author of When Life Bites You in the Wallet. 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, says Lise Andreana, a Certified Financial Planner® professional with Continuum II in Burlington, Ont. and author of Financial Care for Your Aging Parents. “One or the other may be manageable, but some are trying to do it all. They want what they see on TV.”

Andreana cites 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.

Family members also have expectations. A man in his mid-50s was prepared to go into debt for his daughter’s wedding, she says. “It’s absolutely not the right thing to do. She can’t afford it and neither can he. It’s a poor choice of priorities for someone who should be preparing for retirement.”

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 FP Canada.

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.

To find a Certified Financial Planner® professional in your area that will help guide you financially, use our Find Your Planner tool.

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For more on how to help acheieve your retirement goals, read Five ways early tax planning keeps money in your pocketHow to banish the RRSP rush and Take back control of your cash flow