The Debt-Free Delusion and The Stress of Imagined Retirement

There’s a good chance you are actually deluded about the age you expect to be debt free. Based on the latest poll by CIBC, average Canadians expect to be debt-free by age 55 but only about 35% are debt free in this age group. It’s interesting how in every age group people believe they can be debt free in 10-15 years.

  • Canadians aged 18-24 believe they will be debt-free by age 32, on average
  • Canadians aged 25-34 believe they will be debt-free by age 44, on average
  • Canadians aged 35-44 believe they will be debt-free by age 54, on average
  • Canadians aged 45-54 believe they will be debt-free by age 60, on average
  • Canadians aged 55-64 believe they will be debt-free by age 65, on average

While I could go on and on about how paying down debt is a long term plan that requires discipline and a strategy I will skip regurgitating the same message since a lot of sites out there do a good job at it.

On one hand we live in a society that offers a lot of attractive wants vs. needs and on the other hand financial institutions keep on bombarding us with clips of retired active people who are so unnaturally happy you’d think they just smoked an illicit substance. And the brainwashing is working, we truly believe we will have so much money in our retirement that we can afford a cottage, travel the world every year and have so much time you’d end up learning to speak Chinese. And because we want to be so high happy in our retirement just like the couple on TV, we scramble to online calculators only to be shocked with the resulting magic number!

Debt and retirement are closely linked, how can you retire comfortably if you’re still carrying debt?  And if you do become debt free in your mid-fifties, those 10 years before you hit 65 might not be enough to set a $1-$2 million aside. Oops! You might have to skip the cottage…don’t get depressed though, you can still pickup those mandarin lessons.

What’s all that about? Well I think it’s time to reduce the stress associated with retirement and with paying debt. Wasteful spending is not to be defended but debt might come in handy when choosing a certain lifestyle like buying a home for example. Not every household makes $100k a year and not every household has 2 full time working members (that is if you’re not a single parent household). In my case, my wife will be working part time for several years until the kids are old enough. Sure, over the years I will miss an extra $100k in my retirement account but in our opinion our family comes before money.

You can ask me about my retirement magic number, or my debt free age and the answer I will give you will only be partially true. I don’t know if I will keep the same level of income for the next 10 years, so why stress over it all? Stop stressing about your magic number because not everybody will be able to reach 6 figures in retirement funds and that’s fine. I never heard of anyone dying of hunger in their old days because their nest egg ran out.

How many people do you know passed away on or before they reached retirement? Their frugal life in skipping the small pleasures in life was a complete miss and they didn’t even get to take their underwear with them to other side. Live your life fully and responsibly because you do not know what the future holds. Your duty is to use debt wisely, pay it off and slowly build your nest egg as you go without stretching yourself to the extreme in either case. When it’s time to retire, your health will be your wealth.

Are we expecting too much for retirement? Why are we so delusional with our debt free age target?