Older, but not always wiser, on consumer debt

How cash-challenged seniors can improve their household balance sheets

Michael Ryval 17 September, 2013 | 6:00PM
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Americans tightened their belts after the global financial crisis. But Canadians have gone the other way. We've taken on more and more debt, largely encouraged by rock-bottom interest rates. What's especially alarming is the extent to which retired Canadians have participated in the borrowing binge, at a time when they should be free of major financial obligations.

Total consumer debt went up by almost $77 billion, or 6.1% in the second quarter of 2013, compared to a year ago. But the average debt for consumers over age 65 went up by 6.5%, the largest year-over-year increase for all age groups, according to Equifax Canada, a credit-monitoring organization.

That finding is buttressed by a survey released last summer by Canadian Imperial Bank of Commerce (CIBC) that found that 59% of retired Canadians hold some level of debt. Most of that is comprised of credit-card debt, as 39% of seniors surveyed acknowledged they were in this category. The second largest group, at 30%, reported that they owed money on their lines of credit, while another 16% admitted they had mortgage debt. As well, 37% of seniors said they were making more than one debt payment each month.

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About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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