On Wednesday Sasha a resident of Calgary contacted us with an interesting question. She had been compelled into early retirement, she is currently 61 years old. She wasn’t interested in legal advice or one of those spiritual positive motivation talks. Instead, she was much more interest in knowing her options on how to live her life going forward.
We referred her to one of our finance and early retirement experts Donald Veba. (Sasha is not her real name but will be used so as to protect her identity and privacy.)
A few years back I was forced into early retirement at age 58 and I am presently 61. I have one credit card obligation however it’s CAD$ 45 000 which I had while I was still working. I have been battling to pay the requisite instalments. And I am often forced by the situation to withdraw whatever amount I would have deposited. I retired without any annuities or investments or savings. At the moment, I largely rely on the government pension scheme which is largely not enough to cater to my needs.
I am not an expensive person nor am I living a luxurious life. Nonetheless, I have a severe physical reliance on the anxiety medication benzodiazepine which often proves to be expensive.
I get most of the medication from Russia. You may be wondering why from Russia and why not Canada or at the very least the USA. The thing is that I immigrated to Canada when I was 35, I had already been diagnosed with this condition. When I got here I tried all manner of Western treatments, but everything seemed not to be working. So I had no choice but to rely on working medication from my country of birth.
When I came to Canada, I was searching for greener pastures. And I can safely say I have really enjoyed being a citizen of this beautiful country. I just didn’t anticipate early retirement. Or it will even be much better to say, I might not have even anticipated retirement at all or even that at some point I would be this incapacitated.
You can blame me for lacking vision and not planning for my future. I have heard that from friends and family a countless number of times. So please spare me that lecture.
It would be ideal if you help with counsel on what to do. At the moment I can’t bear the cost of the CAD$ 400 regularly scheduled instalments as I just get CAD$ 1200 every month.
As it stands I have no savings or investment funds. I hope I am not asking for too much.
Donald Veba an early retirement specialist reacts:
There isn’t much she can do about her situation. That may sound hopeless, however, this is on the grounds that she doesn’t have any investment funds. And has not planned in advance for financial hardships. This is strange but happens to a lot of people. Many people do not plan for early retirement.
In a perfect world, an individual ought to ensure that every one of their obligations is paid before retirement. But as we all know the world is not perfect. In any case, in this financial situation, everything can just go off the rails and she may end up in a position where her pension is altogether lower than her cost of living. Meaning she generally lives on debt.
The only advice that we can offer is that she goes to the Bank, where she got the credit card. She must find out whether there was in any way protection or insurance on the Credit Card loan. If it was not insured the best way forward would be to negotiate with the bank. Primarily to cancel any interest from accumulating on the Credit Card. Or at the very least reduce it to the principal or any acceptable amount.
Ignoring the debt is definitely not the best foot forward and that thought should not be entertained. That would lead to legal action which may not only escalate costs on the debt but will put her under more strain.
Considering her medical condition that may even exacerbate her condition. She needs to deal with the debt head-on. She may end up paying a smaller amount. Dealing with the debt head-on will demonstrate good faith on her part. And will most definitely ensure that the relationship between her and the Bank remains civil.
The best practice is that a person should not only prepare for retirement but early retirement, incapacitation and even death. As the saying goes “failing to plan is planning to fail”.