Photo: Hugo Chisholm/Flickr
They’re called the golden years, but for some retirement-age Canadians, financial prospects after reaching 65 aren’t so bright, a recent study suggests.
Some 91 per cent of Canadians over the age of 65 want to stay in their home throughout retirement but with record household debts and limited pension plans available, the dream of doing so is becoming more challenging.
In Canada, 15 per cent of seniors have a mortgage, compared to 34 per cent of non-seniors, according to a HomEquity Bank study which analyzes Canadian seniors’ financial health and their ability to retain and maintain a home.
Canadian seniors have an average debt balance of $29,973. Of that total, mortgage debt contributes a whopping 48 per cent, or $14,480.
For all Canadians, the average total debt balance is $64,720 per person. Mortgage debt makes up 67 per cent of that on average.
“HomEquity Bank has long called for an honest, national conversation regarding the financial health of Canadian seniors,” says HomEquity Bank President and CEO Steven Ranson, in a press release. “This study further solidifies that need,” adds Ranson.
There are several factors that are making it increasingly difficult for Canadian seniors to keep their homes: rising debt levels, a lack of long-term savings, longer life expectancies and less-comprehensive pensions.
While a vast majority of seniors want to remain in their homes, only 78 per cent have savings and investments to cover costs associated with staying put. Meantime, 40 per cent have less than $100,000 sitting in their bank accounts.
For 77 per cent of seniors, their primary source of income is the Canada Pension Plan. Some 73 per cent rely mostly on their Old Age Security pension.
After mortgage debt, Home Equity Line of Credits contribute the most substantial share of seniors’ debt at 23 per cent on average. Auto loans follow at 11 per cent.
British Columbia’s seniors grapple with the highest debt balance in the country, at an average of $41,054 per person, compared to the national average for seniors of nearly $30,000. Manitoba’s seniors have the lowest average debt with $20,384 per person.
Given the high cost of housing in BC’s biggest urban centres, it’s no surprise seniors in the province have the highest mortgage debt on average, with $128,338 per senior on average compared to $95,707 nationally.
In addition to the average total debt balance seniors have, the plus-65-demographic has a significant amount of consumer debt, with an estimated $15,493 per senior, compared to the national average of $21,452 per person.