Many of us look forward to the day we can down tools and enjoy a well-earned break after decades of hard work.
The trouble is that a growing number of Canadians are facing financial pressures in later life.
Rather than making the most of the golden years of retirement, many are facing bankruptcy.
According to statistics from the Office of the Superintendent of Bankruptcy (OSB), over 65’s accounted for 11.9% of insolvencies in Canada in 2018.
This represents a 2% increase from 2014.
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Why are more seniors going bankrupt?
Bankruptcy is not a result of small debts.
People who file for bankruptcy have substantial debts, which they have no means to pay off.
In most cases, bankruptcy is a last resort.
A study conducted by Hoyes Michalos revealed that the average senior filing for insolvency owed $70,000.
This equates to a debt to income ratio equivalent to 226%.
One of the main problems facing seniors in Canada is starting retirement in debt.
Data from Statistics Canada indicate that over 65’s had an average non-mortgage debt of $16,500 in 2019.
If you already have debts when you stop working, it’s incredibly challenging not only to pay off the outstanding debts, but also to avoid adding to your financial problems.
If you don’t have a wage coming in, you might find that you resort to borrowing money, which causes debts to spiral out of control.
Figures from the 2018 Joe Debtor Bankruptcy Study show that over 60’s have the highest credit card debt in Canada.
In addition, 20% of seniors also had a payday loan.
Unfortunately, the trend looks set to continue, as the age group due to retire in the next ten years is also burdened with debt.
For many people, retirement debts are not linked to living a lavish lifestyle, but to keeping a roof over their heads and food on the table.
When you stop working, it becomes increasingly difficult to run a household and pay bills, and if you find yourself borrowing through payday loans and credit cards, it can be a slippery slope.
Advice for struggling seniors
Anyone can get into debt.
Whether you’re 20 years old, or you’re approaching your 70th birthday, it’s important to understand that there is help available.
Before you retire, it’s beneficial to work on a retirement plan and to try and save money.
If you’re already in debt, and you’re worried about your finances, reaching out can make all the difference.
There are solutions out there, and an experienced advisor can help you reduce and clear debts, manage spending and plan for the future.
Summary
The statistics for senior insolvencies in Canada are alarming.
If you have retired, or you’re approaching retirement age and you’re concerned about your financial situation, we are here to help.
Don’t hesitate to contact us and speak to a friendly, knowledgeable advisor.
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Bankruptcy FAQs
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What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?
