There are numerous seniors in Canada today in financial crisis. Although seniors were typically the most stable age group financially, more older Canadians are finding themselves in debt. A study by the Vanier Institute of the Family showed that almost 43 per cent of seniors aged 55 to 64 were in debt in 2012, compared to 27 per cent in 1999. More than 70 per cent of seniors held some form of debt in 2012, compared to 61 per cent in 1999.
How Seniors Get Into Debt
You might wonder how it is possible for seniors to get into debt when there is an unprecedented large intergenerational wealth transfer expected from the baby boom generation. We have to remember that mortality rates are down such that many people are living longer than expected and some have not budgeted for the possibility of needing funds to live on for a longer period of time. Some simply have earned too little and/or had no pension or group retirement savings plan from employment to build a nest egg for retirement. Some have lived without saving much at all up to retirement. Now on a fixed income, even with some supplement, without taking action to reduce their cost of living, they find making ends meet becomes a problem.
Some seniors may have had unforeseen costs or experiences that they are now paying for. For example, business bankruptcy, lawsuit, divorce, expensive medical care and/or medication not covered under a health plan, and expensive house repairs (e.g., flooding) not covered by insurance can have a devastating effect financially. Some may have lost investments in the stock market or were robbed or are being taken advantage of financially (elder abuse). Elder-care law is a growing field to address all kinds of elder abuse.
Some seniors had high paying jobs and developed lavish spending habits while employed which they can’t seem to readjust from, or did not save for, upon retiring with a fixed income (pension and savings/investments). Many, for example, got into a pattern of giving financial gifts to children and grandchildren at birthdays and Christmas for years that they now cannot afford but find it difficult and uncomfortable to say so.
Sometimes the current financial challenge may have arisen from something that started out innocently. For example, a senior may decide he or she is no longer going to deny buying something always desired which, in the past, may have been possible as a one-time splurge but not as an ongoing matter. Or, a senior may socially join friends in frequent travelling trips or large purchases when it’s not really in their budget long-term.
Seniors, like other adults, may still be spending the way they always have; however, their income level has changed in most cases. It might be easier to understand how someone gets into financial difficulty when you think about all the changes they’ve had to adjust to over the years. They may have survived multiple economic recessions, war times, disease and illness, natural disasters, the health deterioration and/or death of a loved one, retirement, and divorce or separation. At the same time, seniors are facing the issue that they are moving closer to their impending mortality, planning a bucket list and needing to have enough funds to last them for 20 or more years.
What to Do
Debt management for seniors is the same for any adult except for incoming financial resources. Seniors are fully aware of their situation. They have been living it. They might be less aware of who might be able to assist them to resolve debt problems.
Many seniors have financial advisors, bankers, or at least tax assistance. They may not know that there are Seniors Associations available to them for personal friendship and helpful advice. In Edmonton, seniors can talk to staff at SAGE, the Seniors Association of Greater Edmonton, to discuss concerns or to acquire professional referrals.
They can also seek the advice or support of their adult children, as applicable. This would also open the door to a son or daughter to talk freely to a parent they have been worried about but found it awkward to raise the subject.
As for any adult, it is very worrisome and stressful to deal with mounting unpaid bills, final notices, rent arrears, mortgage default, and more.
At A.C. Waring & Associates Inc., we specialize in debt resolution and have helped numerous seniors over the years to deal with some very overwhelming debt problems.
Our consultation is free. No appointment is necessary. Call or drop in. 780-424-9944 or 1-800-463-3328 in Alberta.