Seniors Debt, How things shape up for Canada

Seniors debt in Canada is on the rise.  In a recent report from Industry Canada and the Superintendent of Bankruptcy, senior’s bankruptcy rates have quadrupled from 4.6 percent to 20.6 percent.
What are the issues that are causing this dramatic rise in our baby boomer generation that was supposed to have it all figured out, and what is our obligation as a society to help them?

5 Issues That Lead to Insolvency or Bankruptcy In Canadian Seniors

There are 5 major issues that I have compiled about what the experts say are the causes of the insolvency. Let’s look at each and discuss if they are really the root causes or part of ancillary issue in society today.

#1 Easy and Accessible Credit

Per the financial consumer agency of Canada there is a large increase in the alternative financial products, like payday loans, instant credit cards, pawn shops, and title loan companies among seniors.  One of the reasons these products are so prevalent is because the traditional banks are not willing to lend money if there is no source of income. I wonder if seniors completely understand the cost of these loans?
Once they access these products it is a very difficult trap to get out of and something very stressful.

#2 Poor Financial Planning

Per a report done by Hoyes Michalos, of the insolvent seniors in Canada, only 56% had RRSP savings and the average total RRSP value for those with RRSPs was only $19,464.
With years of low interest rates, it is easy to see how retirement accounts have been completely eroded. Coupled with the high cost of inflation one can understand how it is difficult for seniors to hang on to their retirement savings.

# 3 Lack of Digital Literacy

The issue of digital literacy was raised several times by several experts as being the single largest obstacle or barrier for many seniors in terms of improving their financial literacy and their financial management skills.
I totally agree with this one. For example, my mother is not computer savvy at all, and the banks are just pushing her to use an online banking system which she doesn’t understand. This also puts her and the aging population at a higher risk for digital scam artists.

#4 Sandwich Generation

Aging baby boomers today are getting sandwiched between having to take care of their aging parents and still needing to support an adult child who has landed on hard times. These adult children are having to moving back in their parents, and not contributing to the living costs. Now older baby boomer is getting pulled down on both sides by their parents and kids.  Forcing them to either to continue working through the golden years or face the reality that the retirement fund they had put away is not likely to be enough to survive.

#5 Embarrassment of Situation

This generation in general was never noted for his ability to openly communicate about uncomfortable and difficult situations.  Back in the day, you put up and shut up.  There in lies much of the issue, nobody speaks about the fiscal problems being encountered and bad decisions or more likely no decisions are made to deal with senior debt.  The problems escalate and by the time Mom and Dad are telling the family of the financial mess and hardship, it is beyond repair.

Duty Of Care For Our Aging Population

So, what can we do about Seniors in Debt. What is the role of our society to help this vulnerable sector of our population?

We need to end the stigma.  At a recent conference in Ottawa, Carrying our Debt to the Grave? International Experts gathered to discuss the mounting debt on our senior population.  The leader of the conference reconfirmed that “People need to know that there are solutions out there. They don’t need to be ashamed. It’s not the end of the world to be overly indebted. You can’t ignore it. You can’t stick your head in the sand but you need to seek out the options that are available to you.”

I personally feel there is a lot more we can be doing for our aging population.  However let’s stick to the topic at hand, money management and seniors in debt.

The first is to offer community micro lending for seniors that may be at need. Instead of these individuals having to get a high interest payday loan, or high finance loan, they can get money at a better interest rate at more favorable repayment terms. This also empowers the community to give back to its population.
I think we can do a better job with senior housing, granny suite programs, micro housing and assisted living programs for those at risk. Creating better accessibility to food banks for seniors is one idea that has been gaining traction in my area.
Provide funding for seniors in debt towards digital literacy. Most seniors fear technology because they are unable to use it. There could be more programs where the younger generations get paid to help seniors with computer skills. This would teach them the skills they need online and get them out of the house to meet with youth in the community.  With the ancillary benefit of teaching young people more respect and community involvement.  Finally, seniors are going to need to say no to their adult children. It is okay to help them out, but not with debt. It is not okay to be putting themselves at risk for the sake of their kids.

The good news is that there are professionals that can help seniors in debt when they are facing insolvency. Bankruptcy sounds like the worst option for a senior who is hopelessly burdened by debt but surprisingly it can lift the burden and help them gain independence for their remaining years.

Contacting an expert Licensed Insolvency Trustee will give them the help they need to get a fresh start.

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