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DORETTA THOMPSON: Hi, you're listening to Mastering Money, where we explore the many financial aspects of good financial decision-making. I'm Doretta Thompson, Financial Literacy Leader for Chartered Professional Accountants, Canada. We provide no-cost programs and free online resources to help Canadians own their finances and learn the language of money.
This season, we're looking at that four-letter word that so many of us know all too well, debt because understanding and managing debt is easier when you know your options and have the right guidance. My guest today is Christine Lang. Christine is a CPA and President and Principal Advisor with Lang Financial Consulting and Wealth Solutions. She's got over 30 years of experience in business and in personal money, tax, and retirement planning.
Christine is here today to talk about something that's sadly a reality for many seniors, carrying debt into retirement. Christine, thanks for being here today.
It's my absolute pleasure. Thank you so much for having me.
So before we begin, why don't you tell us a little bit about yourself and about your career? Because I know it's very special people that go into this area of helping people with planning and debt management.
Thank you. That's very kind of to say. So I worked in corporate finance for about 23 years. I took a bit of the long way into my financial career, working corporately, working for a lot of the big utilities. So I worked at TransCanada Pipelines for about a decade, working in the Treasury Department. I worked for Bell Canada and SMART Technologies, always doing financial reporting, budgets, forecasting, that sort of thing. And then in 2009, I decided to hang out my own shingle.
I was at a Women in Business networking event out of Kelowna. And as part of that, we had a speaker, and then we'd break out into partners to create an action plan. So was partnered with the woman. She owned, I think, a pet food store, and she really wanted to set a budget for her inventory. So I said OK, that's great, but what about the budget for the rest of your business? Well, she looked at me like I had three heads, and she was like, nope. I don't care about that at all.
I care about is my inventory. So I said you know, good luck and wish you all the best and hope it works out for you. A little while later, she came back, and she said, hey, listen, can we talk about that budgeting thing again? We had a very high-level conversation about budgeting, revenues, and other expenses.
And I watched the lights go on, and I thought, ha, this is what I meant to do for a living to help support women specifically, but business owners and the average person with their finances was something that comes so easily and naturally to me. Of course, I have so much experience with it. So then I decided to hang out my own shingle as a financial advisor. And what I've discovered over the last 14 years is there's really not a lot of difference about you and me and the big corps out there.
We're all concerned about the same things. It's just the number of zeros at the end of our balance sheet in our income statements if you will, is the only real difference. We're both worried about cash flow. We're all worried about how much debt we're carrying, how we're going to pay it back, where our savings are going to come from.
So that's how I ended up doing the work that I'm doing, and I'm so happy to be here to talk to you about this very important conversation that's very important topic.
And that's such an interesting observation and also really interesting that it came up for you in the context of supporting women that we know women and we think about our topic today talking about seniors women, on average, marry older and live longer, which means that many women will have a period at the end of their lives where they are responsible for all these decisions.
That's right.
So really understanding those basics is incredibly important
Absolutely. DORETTA THOMPSON: Let's think a minute about what you're seeing in your practice right now. Are you seeing seniors who are carrying debt into retirement? CHRISTINE LANG: Yeah, absolutely. Mostly in the form of mortgages and lines of credit, sometimes with credit card-type debt. But more often than not, it's mortgage and line of credit/HELOC kind of debt that they're carrying. I see three big places where this debt is coming from.
So one is where one of the spouses has maybe had a critical illness, and they've been sick and not been able to work, and they have not had the support of, say, group benefits of having a long-term disability or owning their own personal type of critical illness type insurance. So they've relied on the equity in their homes to help support helping their spouse get well. The other place that I've seen it is lifestyle, where people will have equity in their homes.
So they'll take that equity, and they'll go and buy a rental property, or they'll buy a cabin or some sort of second property for themselves. What do you want them? Like a recreational type property.
And then the third one that I see, and I see this probably more so, is when parents are looking to help support their adult children, and they're taking either equity out of their home to help them get started or using the money to help support them, especially now through COVID-- and we'll talk about that I'm sure a little bit-- where so many people lost their jobs, especially in the hospitality industry across the country with bars and restaurants closing so
I have seen clients where their adult children have indeed moved home during that time.
We know that COVID has had a huge impact. But I'm wondering, on a sort of big picture scale, is that a sea change? Because traditionally, we think about people have always been encouraged as a matter of good financial and retirement planning is that you get a job, you buy a house, you pay off your mortgage before you retire. And then that paid-off house becomes really foundational to a financially secure retirement. Are you seeing a sea change there?
Well, what I'm seeing probably more so is that was the always the intention with people. They buy their home. They work. They buy their house. They pay it off. That's their retirement. But there's a couple of things that I'm seeing. First and foremost, is people don't want to leave their homes when they retire. But they really love their home, and they're really not ready to go. I mean, my husband and I, as an example, we sold our house a few years ago, and we simplified our life.
I love condo living now, but when I talk to my clients about that, they're like no way. I am not ready. Not ready. So they may have no debt, or they've got their home, but now they're leveraging their home for other things, and they're definitely staying in their homes longer. So that idea of using your home as your retirement is definitely shifted.
Interesting. And some studies also are showing that retirees are delaying retirement by up to about five years or more just to get debt under control. Is that something you're seeing?
I am. I do see them working longer, especially where we've seen one of these situations where they've purchased a recreational property. They've helped their kids. I actually have seen-- I have a couple of clients right now, and it breaks my heart that they are at this point sacrificing their retirement in order to ensure that their children are taken care of. And honestly, I think-- well, I'm not, I think. I know it's to their detriment.
And there is a lot to be said for being able to say no at some point and saying I love you, honey, but you need to figure this out on your own. It's kind of like that whole you're in the airplane. You have to put your air mask on first before you help somebody else. In this situation, what's happening is there is they're taking care of their children first at their own detriment, and yes, then they continue to work well into their 70s.
That's a really interesting point. What do you say to people who are, for example, talking to you about should I give my child money to buy their first home or help with their mortgage or whatever? How do you help them navigate that decision?
Well, that's sort of a depends, and it depends on the situation. So I do have clients who are very well off who have managed their money really well over time, not just because they've had excellent jobs, but there's been good stewards of their money. They have a real, what I call, a wealthy mindset where it's not necessarily about the amount of money that's in your bank account but your mindset around your money.
And so there is money to be able to give their children to be able to help them buy their first home or help them pay for university or whatever that is. So those are the easy conversations. The harder conversations, for sure, are around you're helping your children at your own detriment, and I just set it up as we need to have a really grown-up conversation. And they're very hard, and they're never come from a place of judgment.
I always preface that because there's so much guilt, shame, and fear around money, which can often drive our debt loads. So they know what they're doing. They know that this is a problem, but often they don't have the tools or the language to be able to have either the conversations with their children or even where to begin with, themselves. So we sit down, and we start talking about what's happening.
We'll often put together a cash flow plan for them, so we get an year of not just their income and their assets but really take a deep dive into their expenses and into their debt. And is there now a way? Can we put together some structure to be able to help them move forward? Is money slipping through their fingers?
I mean, I don't know about you, but the amount of money I sometimes spend at Starbucks without even thinking about it not that I'm suggesting that somebody should stop going to Starbucks and having their coffee, but it's about being cognizant about where your money is being spent. And once we know that, then we can have some discussions. Do we need to make more money? Do we need to maybe reduce our expenses?
Is it time to maybe have a conversation with your children and start weaning them away or helping them stand on their own two feet in terms of creating their own financial wealth?
It's an interesting point, and you talked about and referred to all of the kind of emotional baggage that's attached to money. Money isn't just money. CHRISTINE LANG: No, absolutely not. DORETTA THOMPSON: There's so much judgment and guilt or pride or all the things that money stands for. But we talk about money with seniors. Are you seeing generational differences between, for example, how seniors approach their financial well-being? Their talks about money.
My general observation is that young people are much more open about money certainly than I was at that age, and so there can be a lot more difficulties in those conversations with parents and whether when they want to talk to their adult children, it's not necessarily just about whether they have the tools, but whether they have the kind of ability to be transparent and disconnect from judgment and shame, et cetera if they're really not able to meet an expectation
that they can, for example, provide a down payment.
Yeah. It's not easy for sure, and a big part of it is, I believe, deciding that they want to be different and want to change their mindset. So, mom and dad, they are my clients. Oftentimes, the children come in, and their adult children come in as clients as well, and you're right. I agree. Younger people are-- and I'm saying like younger people.
In their 30s, 20s, and 30s, I mean, that's not a huge part of my demographic, but I do find that the conversations I have with that generation are they're very open to learning and understanding, and they're really open to learning. And if I give them homework to do, they're all over it, and they do it right away. Where when mom and dad my generation come in, you're right. I mean, we didn't talk about money.
And I don't know about what your money story is, but mine when we were growing up is that we were always broke. And only rich people had nice things. And we tried really, really hard to look like we were doing well even though the story behind it, the narrative behind it, was different. So I think that if mom and dad, the parents or grandparents, are open to having the conversation, the tools are there. And honestly, it's not it's really not that hard.
It's just whether the willingness is there or not.
Let's dig into people who are retired or approaching retirement, and they are in debt. Can you describe for me how you would work with them and the kinds of decisions that they need to get their situation in order and, I assume, take some of the pressure off them?
So first and foremost, I always start with a cash flow plan because what a cash flow plan is, it just gives me insight into their financial position. Having known what falls out of there will do a number of things. So if we've found some money that's sort of slipping through their fingers, we would start to apply that to their debt.
But if, say, though, there isn't a lot of excess slipping through their fingers, and they're living very much to the edge of their income earning, especially now with interest rates going up. And if you have a variable interest rate, mortgage payments have almost doubled in some cases. So at this point in time in today's environment, that might be a tricky thing to do. So then we need to look at what are our options.
And sometimes, it's a really hard conversation about do they perhaps need to maybe look at selling their home, bringing in a renter, somehow creating more income. Does it mean finding a part-time gig so they can create some more income? Because there's really only two ways to help pay down that debt faster, and it's either make more money or reduce your expenses. If neither of those are really an option, then we're looking at some hard conversations.
Yes. Are you seeing any indications that seniors may be more vulnerable to debt scams, becoming victims of people who are preying on them and therefore putting their financial security at risk?
Well, I haven't seen it in my practice specifically. But if I had to think about it, sort of pragmatically, my guess would be that the answer would be yes because I think when we feel scared and desperate that we become vulnerable to an auction, that maybe sounds really easy to help ease the pain immediately. DORETTA THOMPSON: So those would be the kinds of scams where people say they can help improve your credit rating, et cetera.
You did refer earlier to the pandemic and the effect of COVID on, we know, people's jobs. There will be people, I think, who have moved into retirement perhaps a little earlier than they would have intended. The impact of family members. We are seeing evidence of the isolation of the pandemic having a serious impact on seniors in terms of isolation, et cetera. What are you seeing or what are your concerns about the impact of COVID on seniors and decision-making and financial stability?
Well, I think that when we are isolated, that we will reach out in other places to find that sort of connection. So let me give you an example. So some of my clients, and they are all ranges. Not just seniors. But definitely, people who are in that closer to retirement, you're estranged from your family. You're stuck at home. We can't go outside. So how else are you going to get that little endorphin rush but Amazon because Amazon was still delivering during the pandemic?
So while a lot of people did save, I do know, and I have heard-- I mean, I was guilty of it as well. Lots of stuff showed up from Amazon, lots of things that I didn't need. But it was like it was just that little boost of endorphin to enjoy the moment, whether it was something, whether I needed it or not. So I can see seniors who are-- especially if she's alone now, living at home her husband has passed.
She is on her own, and she can't see her children because, of course, now, with COVID implications. Somebody has a cold. You don't want to go and see your grandmother at 85 because you don't want her to be sick.
So if seniors are really struggling with significant debt, where can they reach out
For help? So I think there's a couple of different places they can look to. There are a lot of not-for-profit credit counseling services around the country that they can speak to. Or they can work with their advisor if their advisor is more of a holistic advisor looking at the full picture of their finances, their income, their investments, expenses, and their debt.
And if they can find a fee for service advisor, so that then you will have some independence, and they're truly looking at you and helping you find a solution for you and not what kind of product they can sell to you in order to get paid.
And we will provide some links in the notes into the podcast for not-for-profit credit counseling, the network across the country. What are some of the options that seniors can use to tackle their debt when you're looking at people who are either approaching retirement or early in retirement? What are the things that you would have them look at to tackle debt?
CHRISTINE LANG: Well, I would have them take a really hard look at their finances and look at where they're spending their money, where their money is coming in, and where the money is trickling through their fingers. And it's that trickling through our finger money that we can often get a hold of easier than maybe earning more income. And I think it's very much a back-to-basics question.
Yeah, it absolutely is
What are the foundations for financial decision-making?
I guess there's really kind of three steps. You take a hard look, a really honest look at where you're sitting financially. Is there a little extra money? Even $25 a month or $100 a month, or $200 a month can make a significant impact on your debt if you're able to put that on a regular basis. And then I always like when you're looking at your finances is to just use cash for a while to really get a handle on where the money is sort of slipping through your fingers.
I mean, it's really easy to spend $50 here or $20 there and specifically even when you're at the grocery store. How easy is it to go in for two things and come out with although $150 worth of groceries these days? It's not that hard to spend. But by putting yourself on a bit of a cash strategy can sometimes help to just to help you get really clear about where the money is going.
So what about somebody who is, say, looking to retire in three to five years and is still carrying, say, a mortgage, a significant HELOC, some significant consumer debt? What would your suggestion be to them?
Well, again, it kind of depends. What's the situation? Where did the debt come from? Can we find places to repay?
We did talk a little bit about how women can be left alone with financial decisions that they may not have been making. They may have relied on their husband to be making, and now they have to do it. What's an important way for them to learn about this and to really learn about the financial situation they're in if they've never been involved in that before?
I guess that my only answer is find help. Find somebody that you trust or a family member trust where you can go in and get the process started. And again, I keep coming back to this independence. I just think it's so important to start those conversations with someone who can be completely independent and whose advice is not dependent on selling your product.
I think that's very wise advice. A lot of people don't necessarily even understand they're being sold a product.
That's right. DORETTA THOMPSON: They might see it as a service right rather than something that they're being sold. And like we've mentioned, there's debt counselors that are out there and the not-for-profits that are out there if money is an issue in terms of being able to pay for advice. But advice doesn't have to be expensive.
And there are some great online resources. I know you're engaged with some organizations. I mean, you've been a volunteer with the CPA Canada Financial Literacy Program. There are online resources, I think. Are there any others besides the CPA Canada resources that you're aware of that would be helpful for people?
Yeah. So one of my favorite is through Advocis, which is a third-party independent association that has advisors. We are encouraged to be a part of but not required. So unlike the CPA, we must be part of CPA Canada. I voluntarily am a member of Advocis. They do so much good work in our industry around education. So they can always go to the Advocis website. There's one website I like specifically, and it's called Financial Advice for All.
And it has so much information on budgeting and money and retirement and some estate planning. It's well laid out, easy to work around, and I do quite like that site. DORETTA THOMPSON: That's great, thanks. Is there anything we haven't talked about that you would like to talk about? So I think what I'd like to say about that is ultimately changing your debt situation can be about changing your habits and how you spend your money. And thank you to James Clear from Atomic Habits for that.
Much of my practice is based on that. And I know I've mentioned cash flow planning a few times, but really the foundation of that is building new habits around your money, building awareness around your money, and building those habits. The other book that I really love is The Psychology of Money by Morgan Housel. I love this book. I think money and debt, it's more about emotion than anything else.
And of course, the first step to creating any new habit is becoming aware of your spending and where you're at. And I know I've said it a few times, but with my clients, it's always starting with a cash flow plan. It is the foundation. It's the bedrock of starting to get things in order.
Like you, I'm fascinated by the psychology around money and how the stories we tell ourselves about money, the stories we tell ourselves about our ability to manage money, and our understanding of money and all of the things that get attached to it. For seniors who are now, say, dealing with debt situations, how deeply ingrained are those stories, and is it still possible to go deep and start to unpack some of that and get into a healthier relationship with money?
Yeah. I love that question. I believe, and even studies are showing, that our beliefs around money don't just come from our parents, but they come kind of wired within our DNA. It's our parents and our grandparents and our great-grandparents because it's all of those philosophies that are given to the next generation. I'll use myself as an example. When I was growing up, dad passed away when I was very young, so it was single mom raising two girls for most of our life.
And we were, for the most part, hand-to-mouth. But the story was always that we were broke and we couldn't afford anything and so and that only rich people had nice things. So I wanted to be quote "a rich person" because I wanted nice things because that's where I took my value from. All of my friends had nice things, and I wanted to be part of that. So as I grew up, that was actually a huge driver within my career, and it ended up creating a lot of debt for me because I wanted to look the part.
I wanted to look rich as opposed to being wealthy. I didn't understand the difference between the two. When I look back at my parents, my grandparents, it was only my grandparents were products of the depression. So it just exacerbates down. And then I realized one day that the stuff wasn't making me happy anymore. Yes, they are pretty shoes, but they weren't making me happy anymore. And I started to shift. And I started to shift and started thinking about, well, what's important to me now?
What is it that I really want? Well, what I want is freedom. What I want is time. I want to do the things that I love and that make me happy. And so, for me, that's a switch from a poverty mindset to a wealthy mindset. And I think that can occur at any point in time. You don't need to be 20, 30. I think you can be 75 or 80 years old. And if you choose to change the way you think about your money, you'll fundamentally change your relationship with your money.
I think that's a really interesting observation. And for a lot of seniors today, they will have been raised by parents who were raised in during the depression with a kind of poverty mindset. It's a very interesting observation. You said something very interesting there, which is that this mindset switch is very freeing. You said it was about freedom.
And when we think about seniors who are struggling with debt, taking ownership of that and taking making those steps really is about becoming more in control of your financial situation. There is a kind of freedom in that when you connect to your values because you've talked about that as well, the importance of really understanding what are really the important things in your life. Make sure that that's where your assets are going.
So when you're developing your cash flow plan, make sure that you are really focusing on the necessities and on the priorities, not on things that really don't make you happier if you really step back and think about it. CHRISTINE LANG: Yeah, absolutely. That's a great way to summarize it. And I think the other piece that you mentioned, which is important for people to think about, and that's connected with taking ownership.
It's also the clarity and the ability to discuss with your children, for example. This is what the situation is. We need to be realistic about this. And we don't like to feel that we can't give our children, even our adult children, everything that they might need or want, but it's really important for people not to sacrifice their own financial well-being in retirement. I think that's something that, as you say, those hard conversations.
And if I may, just on that note with speaking to your adult children. I do encourage and have seen amazing results. When I say to my clients, have you spoken to your children about this? And in this case, we're talking about debt, but often I'm talking about their will and what's in the estate, and what they're planning on doing. And they're like, oh, I don't want to talk about it because money, and they don't want to hurt anybody's feelings.
But what I see time and time again is when my clients get honest and vulnerable with their children about all of this, and I would include this conversation in there, it then becomes a connection point in their relationship with their children. Their relationship gets stronger.
And now that they've shown themselves as being vulnerable, it actually gives their children strength because now they have information, and if my client can be vulnerable with their children, then now their children can say they can be vulnerable back. And it can be empowering for the children to say, OK, well, I don't want my parents to suffer. I didn't know that you had taken 150,000 of equity out of your home and given that to me so I could buy my home sort of thing.
For the most part, children don't want their parents to be at risk. They don't want their parents to be hurt, just as a parent doesn't want their child to be hurt. So sometimes, opening up that conversation can actually be very empowering for everyone.
Turning on the lights, I think, is an important thing to happen for everybody. It may well be that adult children have expectations that they've never been given any reason to think we're not reasonable expectations. So turning on that light may be really important.
I do think one of the important things you've referred to is the necessity for people to own their current financial situation and to be planning for their own retirement, and to really understand the importance of risk and security as they move forward. And so that they are not doing things that will threaten their long-term security.
On that journey, you know what? I have a lovely worksheet that I would love to offer as a download for all of your listeners. It's just a billable PDF. And it lists out your pre-retirement financial position, and then potentially what retirement is going to look like, and the difference, which I use a lot of when I'm doing retirement planning. And I'd love to offer it to your listener base as just a nice little downloadable.
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That's great. We'll put a link to it in the notes to the podcast. Thanks, Christine, for joining us today. I'm sure many of our listeners will benefit from your perspective and your practical advice on managing debt in the golden years.
I feel like this has been a very comprehensive conversation, and we've gone from the head to the heart if you will. The head part being the debt and the numbers and the money and down into our heart, which is really where all of this lies. And changing the mindset, and ultimately, if one person has a bit of an aha through all of this, then that makes my day. Fills me out. Thank you.
You've been listening to Mastering Money from Chartered Professional Accountants of Canada. You can click to all the resources mentioned in this episode in the description for this podcast in your podcast app. Please rate and review us. If you'd like to get in touch, our email is financialliteracy@cpacanada.ca. This season is proudly brought to you by BDO Debt Solutions, helping you turn the page on debt.
Please note, the views expressed by our guests are theirs alone and not necessarily the views of CPA Canada. This is a recorded podcast. The information presented is current as of the date of recording. New and changing government legislation and programs may have come into effect since the recording date. Please seek additional professional advice or information before acting on any podcast information. Be well. Be kind.
And remember, managing debt is within your power when you're informed, prepared, and diligent.
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