September 5, 2017

In fact about 14,000,000 Canadians are aged over 50 so should we be surprised that more of them are insolvent?

It should come as no surprise that seniors represent the largest population demographic having financial problems.  After all with 14 million people aged over 50 out of a population of 33 million there are far more seniors than younegr people. 

Along with the demographic reality, which isn’t sexy or sensational for the media to report, we should consider the growth and general acceptance of debt as a Canadian way of life.  Canadians carry more debt per capita than anyone else and it isn’t going down.

Before the 1980s people did not have easy access to debt and that is the primary reason they did not incur debt in great volumes.  Like it or not, human beings are intrinsically lazy, pleasure seeking, creatures – after all, who wouldn’t rather be living an easy life rather than working hard?

The allure of debt is the promise of a better life, an easier way of achieving a standard of living or a life-style without having to scrimp and save.  But the flip side of that coin is the immense cost that comes with a lifetime of debt – interest rates typically 15% and higher coupled with the fact that very few people who use debt regularly can actually afford to pay it off.

Canadian pensioners get the CPP, GIS and OAS for a total of about $1,300 per month (give or take) on top of that some are lucky enough to get private employer pension plans.  Government employees generally get the best pension plans nonetheless incomes for more than half of the country’s adult population are significantly diminished.

People who are now retiring at age 65 were 30 years old in 1980 and by the 1990 when credit cards and other forms of debt were becoming really accessible they were still in their 40s and working.  Many of them had children still living at home and were buying larger homes than they could really afford – partly explaining the resort to debt to cover expenses.

Most Canadian working people refinance their unsecured debt by adding it to their mortgages and then in order to manage their monthly payments they extend the terms of those mortgages.  By the time they sell their homes they often have little or no equity left – they have simply been interest instead of rent.

Are the numbers of seniors filing for bankruptcy really soaring as suggested in media reports?  I don’t think so unless we look the other way on demographics.