Although we have chosen to be debt free for many years, I am aware that one doesn't have to be debt free in order to retire. I know retired people who continue to have significant debt. They have car loans and mortgages on their homes. It all comes down to having adequate and dependable cash flow to meet all expenses. This means, that when it comes time to decide when to retire...cash flow is more critical than net worth. My straw pole, based on random observations over the years, indicates that most Canadian retirees drive newer vehicles. How can they afford to do this?
I suspect that many people retire, then later find that they have more money than they counted on having. In Canada, Canada Pension Plan (CPP) and Old Age Security programs provide significant income over and above any private employment pension plan. These sources of income alone can pay for a lot of luxuries. For example, a $300 per month car loan comes to $3,600 per year. This is well under the $470 per month or $5,680 per year average CPP income that the average Canadian retiree receives.
I will discuss more on Canada Pension Plan pension amounts in a future post.