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Debt Advice: Canadian Seniors Retiring with High Levels of Debt

Posted on 21 June 2017

No matter a person’s age, debt can be a stressful financial burden to deal with. Once that debt becomes unmanageable, it is even more overwhelming. However, when one is working, or has the ability to take on work to increase monthly income, things may seem a bit easier compared to someone who has retired and is relying on RRSPs and pensions to get by, and often a little debt advice goes a long way. For retiring seniors, debt is often a more pressing and troublesome issue.

According to a recent Globe and Mail article which references Statistics Canada numbers, “the total amount of debt held in households led by people aged 55 to 64 almost quadrupled between 1999 and 2012, while the level for the overall population did little more than double (these are inflation-adjusted numbers). One third of households led by people aged 55 to 64 still had a mortgage and 38 per cent had credit-card or instalment debt (basically a payment plan for purchasing an item).” That amounts to significant debt carried into retirement!

When you factor in how low old age pensions are in Canada, a significant debt load can really hinder an individual’s ability to meet their monthly financial obligations.

According to the Government of Canada, these are the payment amounts/month for Old Age Security Pension (OSA):

  • single, widowed or divorced pensioner = $864.09
  • If spouse/common-law partner receives the full OAS pension = $520.17
  • If spouse/common-law partner does not receive an OAS pension = $864.09
  • If spouse/common-law partner receives the Allowance =$520.17

Retirement should not come with stress. After working so hard, for so many years, retirement should be a time for relaxing. The last thing we want is for our senior parents and grandparents to struggle with financial pressure as they age.

While some may argue that, as we age, credit takes on a different level of importance, and overall quality of life should be most important, it is essential to note that different types of debt can dictate more severe consequences. For example, while credit card debt may not make falling asleep at night difficult, tax debt is serious and CRA can garnish up to 100% of pension income, leaving a person with very little (if anything at all) to live on.

Financial options vary depending on a person’s financial situation – many things have to be considered, including assets, debt, types of debt, future plans, and the overall quality of life a person expects. It is important to sit down with a financial professional and work through everything.

This is something Spergel is sensitive to and we treat your parents like our own. This isn’t a one-size-fits-all scenario – everyone’s situation is different. We will look at all the variables and craft a plan that leaves your senior family member with reasonable monthly payments and protects them against action from creditors.

Call us today for a free consultation and real debt advice you can depend on: toll-free at 310-4321.

Sources:

http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/this-is-how-millennials-could-end-up-paying-the-bills-for-baby-boomers/article34931357/

Helpful starting information:

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