Seniors are carrying more debt into retirement and, correspondingly, a growing number of seniors are going bankrupt in their Golden Years. According to the Federal Office of the Superintendent of Bankruptcy, 10 % of those who declared bankruptcy in 2014 were aged 65 and older – That’s a whopping 20.5 % increase from 2010.
One of the reasons more seniors are going bankrupt in retirement is a plus — we’re actually living longer. Unfortunately for many of us, this means we’re outliving our savings. According to Statistics Canada’s most recent numbers, in 2012 42.5 % of people aged 65 and over still had debt and were retiring in the red. That’s a remarkable increase of 55% since 1999.
Paying down debt in your senior years can be challenging on a fixed or static income. Throw in an unplanned setback like an sudden unexpected family illness and the bills can become crushing. The stress of the financial burden plus the stress of care-giving can be overwhelming, causing not only financial strain, but mental and physical as well.
A research study examining older Canadians and their finances found that unexpected major events such as big health expenses or caring for adult children challenged many seniors’ financial plans. For those under 75, the most common event derailing financial plans was an unplanned early retirement, often due to ill health. The best way to combat this is to be fully aware of your financial situation and prepare as best you can for the unexpected. The more we understand about our own expenses and our own financial situation in adulthood, the better equipped we will be to be able to handle the future and less likely to fall into financial difficulty in retirement.