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my money coachSeniors and debt

by Tim St. Vincent

You are a senior, or you are about to be. You are getting ready to head down the golden path of retirement; nothing ahead of you but relaxation, grandkids, and maybe a new hobby or two. Oh, and debt. Yes, debt.

I know. You don’t really think about debt and retirement as going together, but they do. Maybe that’s the problem; because we don’t think of them as going together, we forget about the debt part of retirement. Then when you retire, there it is. Debt. Like a great big puppy dog it shows up on your doorstep wagging its tail, and you think “How did that get there? I don’t know what to do!”

Debt and retirement shouldn’t come as a surprise. Most of us were never taught how to handle credit properly. To some extent we all know that the second we use credit, it becomes debt; but we don’t really fully understand. Because we don’t fully understand credit when we first start using it, by the time we retire, we have a lifetime of mistakes that follow us into retirement and this challenge only increases as we age.

Equifax, one of Canada’s two major credit bureaus, recently put out a report on consumer debt. According to the report we have over $1.71 trillion of debt and the post retirement to pre-retirement group is at the greatest risk. The 65-plus age group has the largest year-over-year percentage increase in debt; the 56 to 65 age group (early retirees) come in with the second largest balance of debt owing while the 46-55 age group (on the brink of retirement) carry the largest debt balance at $32,654. This information matches with the information that the Credit Counselling Society tracks; the 55-plus age group is the fastest growing group seeking our help and the average debt carried by our clients is $30,752. Debt and Retirement, hand in hand. Who knew?

So why is this happening? There are many thoughts on that. Credit really started its rise in the mid to late 60s. We weren’t ever really educated on it; it was just there. As we grew older we came to rely on it and use it more and more – still without thoroughly understanding it. When it came time for us to retire, like a little puppy dog, it came trailing after, happy to follow us into the golden years.

There can be many reasons why debt is such an issue among the 55-plus age group. When the stock market corrected back in 2008/09 many people cashed out their investments, locking in their losses. Now, almost 10 years later, people are depending on those funds to retire but they are no longer there. Then there are the boomerang kids. They are returning not only to their parents, but to their grandparents too! Some studies have shown that many retirees delayed retirement by five years or more in order to get their finances in better shape; the same study shows that 25 per cent of parents are supporting their adult children to the extent of $500 or more a month. One third (33 per cent) of Canadians work past the age of 66 because they need to. Almost 50 per cent of retirees worry about their debt.

Debt can easily change from that cute puppy dog that you took in because it brought joy to the dog that you can never quite house train, the one that leaves a mess all over the place. So then, how can we house train and clean up after this puppy called debt?

As is often the case, we have to go back to basics. You need a solid budget and you need to track your expenses to see how closely they match your budget. Plan on needing about 70 per cent of your pre-retirement income to meet your retirement expenses. Pay off your debt, and don’t bring any more puppies (debt) into the house, no matter how cute they may look! If you can, retire your debt one year before you retire your work! If you haven’t retired yet, do a pre-retirement and a post-retirement budget to understand how much you will really need.

We also need to educate our youth. Credit is all around them. Without anyone to teach them how to use it properly, they will have their own puppy dogs of debt following them into retirement.

If you are struggling, take some comfort in the knowledge that you are not alone. In many ways our seniors are among the most vulnerable when it comes to dealing with debt. If you need help, ask for it. You aren’t alone.

If you have questions or suggestions for future articles, please contact me at 1-888-527-8999.

Tim St Vincent is a retired CFP and is a Certified Educator in Personal Finance with the Credit Counselling Society, a non-profit organization. If you wish to contact the Society for further information, assistance or to attend a webinar, please call 1-888-527-8999 or visit or

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