Finances can tarnish the golden years for too many seniors
June marks Seniors’ Month in Canada, a time to celebrate the seniors in our lives and in our communities. However, it’s also a fitting time to probe the wellness of aging Canadians. Wellness means several things. For seniors, there are the challenges of physical aging, the potential for loneliness and the issue of financial security.
A recent survey of 1,000 Canadians over the age of 60 shows that “running out of money before they die” and “not being able to pay for long-term care” top the list of financial worries of seniors. The Seniors and Money Report paints a picture of aging Canadians facing financial jeopardy — such as working past age 80, widespread debt, and vanishing pension plans.
One-in-four seniors fear they will run out of money before they die, while an equal amount fear they will not be able to pay for long-term care. Other concerns include never being able to pay off their debt, not having enough money to retire, having to sell their house or needing to depend on their children for financial support.
For Canada’s working seniors, has retirement become a luxury? While one-infive Canadians still work past age 60 (and one-in-16 still works past 80), the reasons for doing so vary. Too much debt, not enough savings, still helping their adult children and “I’ll never be able to afford it” are some of the main reasons. On the positive side of the ledger, these are balanced out by the fact that nearly one third of Canadians over 60 continue to work because they simply “love their job”.
There’s been an astounding growth of the credit industry, as well as fundamental shifts in society’s values and financial expectations. Rising affluence and rising debt have become almost indistinguishable, as year-over-year consumers embrace higher levels of debt together with lower levels of savings. This is true among seniors as well. More than half of Canadians age 60 and older carry at least one form of debt, with a many carrying two or more types of debt. The usual culprits here tend to be credit cards (which lead the way), lines of credit, mortgages, and (to a lesser extent) auto loans. Surprisingly, more than one-in-three Canadians 80 and older are carrying at least one form of debt, perhaps most unexpectedly, nine per cent have car loans.
Debt is not unique to seniors. However, as physical aging takes its toll, work becomes increasingly difficult and the bills still must be paid. The report illuminates the beginnings of a generational shift in how seniors are supporting their retirement. The number of seniors who list a company pension plan as a source of income is declining. Currently, fifty per cent of those 80 and older list a company pension plan as a source of income, while that percentage dips to 41 per cent among those 60-69.
Times are changing, and many seniors haven’t planned for or anticipated the life and financial circumstances they now are facing. Debt later in life can be incredibly frightening. Some seniors may feel embarrassed or think that it’s too late to ask for assistance when it comes to their finances. It is never too late.
It’s important for seniors to be informed about the fundamentals of personal financial management and help them to take charge of their finances. It’s also critical for policy-makers to take steps to ensure seniors and those who provide them with financial advice are best equipped to chart a path to a stronger, more successful financial future.
While the report paints a picture, it’s not all doom and gloom. There are a multitude of resources available to seniors and their families. Truthfully, it’s never too late to get started. Nonprofit organizations like Credit Canada and the Financial Planning Standards Council provide resources for all Canadians at any stage in their life; wherever a person sits on the spectrum of debt or savings.
There are steps that can be taken by seniors and their families to ensure their financial security.