How To Be Debt-Free And Retire Early In Canada?

For many Canadians, retiring early after paying off all their debts is a way of life! However, for about 25% of retirees in Canada live with debt, it makes sense to establish your financial freedom when planning your finances for the long term. In this article, experts from Alpine credits have developed a guideline that will lead you to an early debt-free retirement.

Retirees often have limited sources of income, which implies a fixed financial contribution each month. This explains why you need to protect yourself against unpaid debts in the first place. Professional money management and intelligent management of your assets can mitigate your vulnerabilities as a retiree. Read on to find out how you can retire at age fifty in Canada, paying off all your debts.

Early retirement: what does it mean in Canada?

Officially, the retirement age in Canada is 65. This is what offices and workplaces have demanded over the years. Even Canada Pension Plan (CPP) and Old Age Security (OAS) payments begin at age 65.

However, given the gradual change in retirement trends, the average retirement age in Canada is 63.5 years old. Therefore, when thinking about early retirement, you must have 50 in mind.

Given the average longevity of 82.5 years, it makes sense to retire at fifty and enjoy your lifestyle with your accumulated funds. Therefore, it is imperative to plan your finances for early retirement, as you would like to spend your last years traveling or adopting a luxurious lifestyle.

However, your debts demand attention and you need to settle them as soon as possible. Take a look at these statistics to understand how important it is to settle your debts from the start.

  • About 66% of retirees in Canada have unpaid credit card debt.
  • While 26% are still making their car loan repayments, 7% have yet to pay their healthcare expenses.
  • Another 7% of Canadian retirees have vacation expense debt.

Retiring early in Canada: what should you do?

You must prioritize two aspects if you want to retire at fifty. First, you need to accumulate enough savings to cover your basic living expenses. Second, you need to consider personal preferences related to luxury, travel, or other ways to spend money. Ideally, you should start investing early in life so that you have enough funds when you retire.

The equation also involves clearing your debts, which ensures that you won’t continually deplete your savings or income. Here are specific strategies that can help you achieve this two-pronged financial goal.

Tips for an early, debt-free retirement in Canada

Here are some tips that can help you retire early in Canada:

Reduce your expenses

When you start making money, it can be tempting to get carried away with extravagance. However, you should reduce your expenses when you have an early retirement goal in mind. Don’t go for fancy cars, expensive vacations, or other expenses that might have alternatives.

Take care of your credit card spending too, as you might end up making impulse purchases. At first, you might feel intimidated to refrain from spending. Once you’ve made financial best practices a habit, you can start saving for the future!

Pay off your mortgage quickly

To settle your mortgages faster, be sure to pay more than the base requirement. For example, if you’re paying $1,750 on your mortgage, try paying $250 more. This will accumulate over the month and eventually minimize your interest paid. It would also help reduce the principal amount faster.

Each year, try to make a one-time lump sum payment. For example, make the most of your annual bonus or tax refund to reduce the principal amount as quickly as possible.

Start your savings mission early

When you plan to retire in your 50s, don’t wait until your late 30s to save. Instead, you should start saving as soon as you start earning comfortably. Remember that you can benefit from the compounding effect when you start saving in your twenties.

Also, you need to consider expenses when you have children. Regardless of all those cash outflows, saving early can significantly strengthen your finances.

Consider your housing needs

When you set yourself the goal of being mortgage-free, you can achieve it!

When you plan to buy a house, think about your bare necessities. Just go without them if you don’t need a luxury home with five bathrooms or a library. The reason is that once you fall into such an extravagance, you will end up making high EMI payments for the rest of your life.

This will end up ruining your savings plan and you will no longer have financial security when you retire.

Consolidate your debts into a mortgage

Consolidating multiple high-interest debts into one mortgage is a strategic move when trying to save for retirement. Even if you have a large debt, reducing interest rates would facilitate your financial flow.

Many financial institutions and banks in Canada offer debt consolidation loans. With these loans, you can simply combine all of your outstanding dues into one full mortgage payment. You have to shell out a single payment at a lower interest rate each month.

If you own a home, you may qualify for a line of credit or a home equity loan. This would be a reliable financial resource that would stabilize your income. Simply contact one of the experts and talk about your eligibility if you want to avail the benefits.


Although you may be too absorbed in your future plans, missing out on a suitable investment would delay your retirement. Most successful Canadians who retire early opt for a TFSA Where RRSP. Alternatively, you can start investing in one of the recognized schemes for your retirement. If you don’t know where to start, just consult a financial planner. Being strategic with your plan can help you save adequately for early retirement.

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