In a previous blog post (Seniors in Canada have the highest insolvency and bankruptcy rates), I talked about the statistics that showed how the number of Canadian seniors that are filing a Consumer Proposal or Bankruptcy is on the rise.
Aside from the statistical and demographical reasons discussed in the previous blog, there are quite a number of other reasons why more Canadian senior citizens are having acute debt problems.
New causes of debt problems among seniors
For many senior citizens, pensions have not kept pace with the cost of living. There are new costs that were not considered when pension levels were set:
- A generation ago, most seniors did not have cell phones, computers or internet access. Today, these are needed to stay connected to family, friends and society.
- The recession and financial crisis of 2008 and 2009 saw a number of people’s pensions and RRSPs suffer major losses, as investments decreased in value. These losses meant that many people have fewer resources to fund their retirement than they planned.
- Interest rates have remained at historically low levels for a record number of years. As people get closer to retiring and when they retire, the prudent decision is to shift to more conservative investment choices. The lower interest rates mean that people are getting much lower returns to fund their retirement than previous generations.
- In addition to the lower returns on their retirement funds, people are living longer and their retirement savings are not sufficient to fund the additional costs of living longer.
- Some seniors are also stuck in what is known as the “sandwich generation”. They are helping to care for older parents who are living longer, while also helping to support children or grandchildren.
- The increase in cost of living and additional costs of supporting family, combined with lower returns on retirement savings funds, means that many seniors just don’t have the income to pay for their ongoing living expenses. The result is that they take on debt to survive. Eventually, debt levels become too high for people to manage.
How senior citizens can deal with debt
For many seniors, the only option is to file a Personal Bankruptcy, or decrease their debt (with up to 80%!) through a Consumer Proposal.
If you, or anyone you know has trouble paying their bills, don’t wait until it gets out of hand. Schedule a free, non-obligation consultation with one of our debt professionals, to learn about all available options to deal with your debt issues.