Seniors debt and bankruptcies on the rise
More Canadian seniors than ever are being forced to declare bankruptcy.
Easily accessible credit, adult children returning home and a lack of planning are forcing more Canadian seniors to declare bankruptcy, says Scott Hannah with the Credit Counselling Society.
A Statistics Canada report shows the number of seniors in debt aged 65 and over jumped by 40 per cent between 2012 and 2015.
The number of seniors declaring bankruptcy is being seen more often than we`d like, said Hannah said on CBC Radio's BC Almanac.
"Fifteen years ago, people age 55 and over came in and requested help. That's about one out of 20 people," he said.
"Today, it's one out of five [people]. That's a 400 per cent increase in 15 years and we don't see that stopping anytime soon."
Seniors debt issues rising
Society officials aren't surprised to be assisting clients who are in their late 70s and 80s about debt issues, Hannah said.
He says several factors, including historically low interest rates, are responsible for the increased number of seniors declaring bankruptcy.
Many seniors only invested their money in low-interest savings accounts and now aren't making enough to manage through their senior years.
When seniors retire, they don't always change their spending habits, sometimes filling the gap with readily available credit cards. They maintain minimum payments but inevitably slide into debt, he said.
And increasingly, adult children, commonly referred to as the boomerang generation, are also playing a role in their parents financial misfortunes.
These children move back home where they don't contribute to living expenses. Parents often wind up paying the full load and digging themselves deeper into debt.
Hanna counsels parents to decide between crushing debt or tough love.
"It means living on [their] own, or if [they're] living under this roof that [they] are contributing to this household and these costs," Hannah said.
"We`ve seen some parents have to make some really tough decisions because their children didn`t want to go, but they had to."
Failing to plan
Seniors don' t plan to be in debt, but they can for the most part plan their way out of it, Hanna said.
They should first assess where they are at with income and debt.
Next, curtail their working life spending habits, sock away funds for life events and plan for extended illnesses, medications and insurance.
Hannah cited one client who was diagnosed with a heart condition that required expensive medications. He coped with his credit card debt by not buying his heart medication so he could make his credit card payments.
"Income is tight. But Illness can make it tighter."
He says if debit is too much to handle, seek help right away.
A certified credit counsellor can hep reduce monthly debt payments and eventually eliminate debt entirely,
"Taking action sooner makes it a less rocky ride," Hannah said. "When seniors enter their golden years they should be golden."
