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You woke up at 10 am, sipping on your warm cup of black coffee, looking at the amazing weather through your window, you have finally found time to enjoy life.
Ah, the perks of retirement!
But isn’t the above scenario too good to be true? When in reality, things are quite the opposite.
You enter your golden retirement era paying down your debt, refinancing your mortgage, and dealing with high interest on credit debt.
So, what can you do to reverse the situation? Or, does your credit score really matter for your “golden” time? And how can you maximize your credit card to be the best retiree?
Let’s find answers and some helpful credit retirement tips!
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Well, your retirement won’t directly and instantly harm your credit score. That’s a start!
Moreover, your Equifax credit report doesn’t include your employment or salary data, so your outstanding credit history won’t be affected.
So, will retirement impact your score?
Not the retirement but the financial decisions you make in that no-wage era definitely do! What could those be? Here are some examples:
Another thing to understand is that your retirement can also impact your borrowing power, as lenders might be skeptical about giving you money.
See: Need to contact your lender? Read these 9 questions before making the call!
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Many retirees believe their loan days seem to be over once they stop working. However, for many retirees, this is by no means true.
According to a report by CBC, almost a quarter of retiree Canadians had a debt situation.
It only implies for most Canadian retirees; the golden time is not so gold after all.
You might need to buy your second home or a new car for your wife or simply book a relaxing trip with your family.
The big purchases never end!
And grappling with debt in Canada won’t work in your favor whether you are in your 30s or 602.
Your good Equifax credit score can help even in your retirement era. Here’s how:
So, how can you live the best financial life in your golden time? Let’s find out with some credit retirement tips.
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Yes, you must be ingenious with your credit when your income has reduced, but you still need to live lavishly.
Jonathon Look, a retired Forbes contributor, advises people to take it easy and refrain from applying to multiple cards for retirement.
That’s a perfect credit retirement tip from the expert himself! Here are some more:
You might think of closing all your previous credit cards or store cards as you’re retiring without a steady income,
However, that won’t be good for your credit score if those cards have 10 or 15 years of good history.
Because the moment you close the account, all the good credit from it will also vanish from your credit report!
See: Impact Of Inactive Credit Cards On Your History.
Curtis Arnold, an experienced credit expert shares that older adults might be tempted to use cash for all their purchasing after retirement.
But that’s not the best idea!
Why? Because stopping the use of credit cards will tremendously affect their credit rating and score.
So, if they need to make purchases that need a card at one point later in their retirement, all their good credit history would already be gone!
Hence, the best credit tip you can get is to continue using at least one of your cards.
You might have already heard about the mighty 50/30/20 budgeting rule earlier in your life. But that’s not the only thing you need to be doing.
If you’ve recently taken time off, you must start practicing “retirement spending.”
But don’t overdo it! The plan is to enjoy your golden time, not make it miserable and cheap.
Do you want to plan your retirement spending like a pro retiree? Here watch a simple video to do exactly that:
As we previously mentioned, it's possible that during your retirement years, you won't have any sources of passive income, which would limit your income.
So, even if you have enough money in your savings account or have a good credit history, you might be unable to get the finances you need.
The reason is after retirement, the lender might be skeptical about doing that as you won’t have a steady income source.
Just because you are a retiree doesn’t mean you should forget all you learned in your prime time.
The key is to be persistent and continue practicing good financial habits.
Don’t forget your good money habits of prime-age because these financial practices are the assets of your retirement life.
Most people believe you only need help from a financial expert when you’re dealing with tax returns, mortgage loans, or savings.
However, that’s not entirely true.
Yes, you successfully got through your young adult phase but still need to live.
See, there are quite a lot of things you can get advice from your legal expert to be better at handling money in your retirement.
Here’s a helpful video that explains the top mistake you might be making with your financial advisor for your retirement planning:
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Retirement can be troublesome for Canadians who don’t know how to maximize credit? So, here are some tips to help you out in your golden time:
The goal is to keep the percentage as low as possible.
In fact, if you can’t afford to clear all the credit and mortgage debt before you retire, that’s the absolute best you can do!
However, if you still have debt, the expert advises avoiding using more than 28% of your finances to deal with your debts.
Of course, the main reason is the limited income and earning resources in retirement.
Retirement is a phase of life that’s meant to live freely without worrying about debt or credit payments.
It’s your golden period where you get to do all those things you’ve always wanted to do.
However, the scene can be changed if you don’t know how to maximize your credit cards and financial habits.
So, you must be educated about money and finances to enjoy your retirement fully.
Read the full guide to know how!