Before retiring, most people count on their jobs for money to pay the bills. When something in your life changes, such as taking time off work to have a baby, or losing your job, you need to find other sources of income.
Where can I turn when I need to replace my income?
- Workplace and government plans These may help you replace income if you lose your job, or if you get hurt or sick and can't work. They may also provide money if you take time off work to care for a new baby or a sick family member. Tip: You may also be able to draw on unpaid salary or vacation pay. If you become very ill, or injured, and are never going to be able to work again, you may be able to draw on your pension savings.
- Insurance This may pay your monthly debts if you get sick or hurt, and can't work. For example, you can buy insurance to pay your mortgage, a car loan, or your credit card payments until you get back to work. Disability insurance provides income each month if you get sick or hurt. Tip: It's cheaper if you can buy disability insurance through work.
- Savings Use emergency funds first, if you have them, to pay your bills. Avoid taking money from your retirement savings. Tip: The experts say that everyone should have an emergency fund for times when your income stops. How much you save is up to you.
- Loans You may be able to borrow money from friends, or family, or from the bank. You may also be able to borrow back some of the money you have put into your home. Loans make sense only if you have a way to pay back the money, and the interest, on time. Tip: Using credit cards is one of the most costly ways to borrow. Avoid this if you can.
- Your home or other property You may sell your home or other property for cash, then buy or rent another home for less. You may sell your car or boat and buy a smaller, cheaper model. Another choice is to keep your home or cottage, but rent it out to bring in extra money.
Remember: There are times when your job or income may change
Plan ahead, before a crisis hits. If you wait until you really need money, you may find it hard to think through your options clearly.
Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca