There’s a real fear among Canada’s five million seniors and boomers who are approaching their retirement years that they may not have enough money to have a comfortable retirement. Media reports about under-funded pension plans have added to those concerns.
According to a national survey conducted for the Canadian Institute of Chartered Accountants (CICA), half of Canadians admit to worrying about money. Another study by LIMRA, an association of insurance and financial services companies, found that those aged 50-65 are not confident they will be able to live comfortably in retirement, and expect to have a reduced standard of living compared with their existing lifestyle.
A review recently released by a prominent bankruptcy firm found that older Canadians are deep in debt. Bankruptcy filings among seniors age 60 and over have gone up from 8% two years ago, to 10% of all filings last year. The results were based on a review of approximately 7,000 personal insolvency filings from 2011 and 2012.
The highest debt levels, according to the review, are in the 50-to-59 age group, where average unsecured debt is more than $84,000. It also found that one in three in the older age group still supports at least one dependent and carries a mortgage.
There are several reasons debt has been increasing: low interest rates; a shift towards consumerism; increased competition and deregulation in the financial sector; financial product innovation; and the relaxing of credit constraints. There are also factors such as increased medical and health care costs, decreased mental fitness, depression and loss of a spouse.
Retiring with debt can be stressful. Many Canadians are not aware of their overall debt load. It’s important to know your current situation and how much money you realistically need for retirement. If you’re nearing retirement, or are already retired and your financial situation is causing you stress and is affecting your health, consider discussing your options with a Trustee in bankruptcy. A Trustee can provide solutions to deal with your debt load, stop the interest and phone calls, and your pensions and RRSPs may be protected.