Rising Insolvency Among Seniors

Canada’s population is ageing.  It is a fact we are all used to hearing, but few of us think about the stark reality of the numbers. Between 2013 and 2023 the population of the 0-54 age group will increase by 1.2 million.  The population of the 65+ age group will increase by 2.2 million, almost double. Not only is our population aging, but according to recent studies and surveys our seniors now are more likely to have money problems than their predecessors.   Seniors are 17 times more likely to file for insolvency that they were in 1990.

In previous times seniors were the most financially stable individuals.  In the lead up to retirement they would reduce their debt load and increase the values of their assets. They generally had paid off their car and mortgage and scored highly on financial health indicators such as debt:income debt:asset and debt:equity ratios.  They also placed high value in savings and were likely to have liquid assets saved against retirement.

Currently the outlook is very different.  In a recent study it was found that Canadians age 54-64 place little value in savings and are less likely to have money saved against retirement.  Debt loads are increasing across demographics, but those of retirement or pre-retirement ages are increasing their debt load much faster than the younger generations. Seniors are also carrying higher median credit card debt loads than their younger counterparts, and analysis of spending trends shows most of this debt is incurred purchasing necessities, not frivolous consumer goods.

The results of such trends can be seen as more and more seniors continue to work after retirement.  There has been an increase of seniors working part time minimum wage jobs at places such as McDonald’s and Home Depot. While some seniors like part time employment simply to have something to do, more and more are there because they have to be, not because they want to be,

However the outlook is not perhaps as bleak as it sounds.  While seniors are much more likely to file for insolvency now that they were a few decades ago they are still less likely to file than any other group.  The statistics for which can be seen in the table below.

18-34 35-59 60+
1987 56 42 2
2012 21 63 16

 

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