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Seniors Struggling with Debt

Retirement should be a relaxing time where you do not have to worry as much about earning money and paying off bills. By the time you’re retired, the goal is usually to have most of your debt paid off and most of your financial obligations figured out. However, this isn’t always the reality. More and more often, seniors (many of which are living on fixed incomes) are finding themselves struggling with debt.

A recent survey polled 750 Canadians between the ages of 55 and 80. These Canadians were all either fully or partially retired. The survey found that about 20% of people in this age group were still paying their mortgages and 66% were carrying credit card debt. Perhaps most troubling is that the survey found that retired Canadians had an average of $11,204 in non-mortgage debt.

This is a large amount of debt for almost anyone to be carrying, but it becomes even more difficult to handle when you are not working full time and living off of your pension, savings, and government benefits.

According to Statistics Canada, 42.5% of people aged 65 and over had debt in 2012, which is an increase of 55% when compared to 1999.

The issue is such a large problem that Carleton University in Ottawa held a senior’s debt conference in 2017 to determine the effect that owing money has on an older population.

Large debt levels are having a serious negative affect on seniors. According to the federal Office of the Superintendent of Bankruptcy, 10% of people who declared bankruptcy in 2014 were aged 65 and older.  This is a 20.5% increase from 2010.

Retiring without Retirement Savings

One major reason why many Canadian seniors are struggling with debt is because more and more people are retiring without adequate retirement savings and/or without a pension from their employer. According to a CIBC poll, 32% of Canadians between 45 and 64 have nothing saved for retirement and Broadbent institute research found that only 15 – 20% of middle-income Canadians who are retiring without an employer pension have saved enough to retire comfortably.

The reality is that fewer and fewer people these days have employer pensions large enough to cover their expenses in retirement. This means that it’s important for individuals to save more money while they’re working so they can afford to retire when the time comes. However, housing costs continue to increase in many areas of the country and, depending on where you live, the cost of living could increase each year as well. This leaves less money for savings. Plus, since interest rates have been relatively low for a long time, many people have taken on significant debt. This means a lot of people are living paycheque-to-paycheque, with all of the money they earn going towards their bills and debt repayment cost. This doesn’t leave anything for savings, which is a problem when you retire.

Other Financial Worries

Even seniors who have an employer pension or adequate retirement savings can find themselves struggling financially. One reason why is that they want to help their children (and perhaps even their grandchildren) financially. Many parents spend a lot of money on postsecondary education for their kids, and a large percentage assist their children with the down payment on their homes and many other costs. While it’s certainly admirable that you want to help your kids, if you’re spending a lot of your income or savings on your children when you’re retired, it’s possible that you could end up in financial trouble yourself.

Another cost that often causes seniors to end up in debt trouble is medical expenses. People are living longer than in the past and they often have medical expenses that add up over time. You may have saved enough to afford your typical yearly expenses, but a serious medical issue could certainly be costly.

Help for Seniors in Debt

Whatever the reason for your debt issues, it’s important not to forget that there is help available. Many seniors do not look for help with their debt because they feel ashamed of their situation or because they do not realize that help is available. If you have a debt problem, it’s important to deal with it sooner rather than later. Taking a long time to get help only makes the problem worse, as you have to spend more and more money each month to manage your debt.

If you are a senior struggling with debt, talk to a Licensed Insolvency Trustee to find out what options are available to you. We can help. Contact us today.