Last week we discussed whether or not seniors should try and pay off their debt or declare bankruptcy. This week we’ve got some great advice for seniors in debt, seniors with credit card debt, seniors looking for Starting Over, Starting Now.
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Seniors in debt is a serious problem that continues to get worse:
- According to Statistics Canada, one in three retirees over 55 and two in three over 55 who aren’t yet retired are in debt.
- A recent TD Bank study has shown that older Canadians have increased their debt load by 15% (an average of $6000/person) from the previous year. Seniors living in Alberta, Ontario and Quebec had the highest rates of debt accumulation in 2012.
- According to Boomers and Retirement, a new survey by TD Ameritrade, the average Baby Boomer is about a half-million dollars short on retirement savings.
The most important piece of advice we can give seniors trying to start over is to eliminate debt! Carrying debt into retirement is a recipe for disaster. Once you retire and begin living on a fixed income you will no longer have the funds required to service the debt; this is especially true for seniors with credit card debt at high rates of interest. Here are 5 tips for seniors in debt:
- Postpone retirement if at all possible and pay down as much debt as you can. If working fulltime is not an option, consider part-time work.
- Pay down credit card balances as quickly as possible. They are generally the highest-interest loans that seniors carry. You can also call the credit card company and ask for a lower interest rate. They will sometimes agree.
- Limit the number of credit cards that you have.
- Stay away from debt settlement companies! Consumers are continuing to be taken in by false claims offering to settle your debts for pennies on the dollar quickly and easily. The reality is that when something seems too good to be true, it usually is. Debt settlement companies exist for only one reason – to take your money! They will not help you solve your debt problems. There is no instant or quick fix for serious debt issues.
- Protect yourself against fraud and/or abuse. Run away from get rich schemes. There are many scammers out there who have duped seniors out of their life savings and continue to seek out new targets.
As we discussed in Seniors in Debt, Part 3, the right debt relief option you ultimately decide upon will depend on whether or not you have assets, who you owe money to, and how much you owe. For seniors trying to start over there are bankruptcy alternatives – credit counselling, debt consolidation, consumer proposals – which in many cases are better options than declaring personal bankruptcy.
If you’re planning to retire soon or you have already retired and find yourself dealing with serious debt, consult a professional Trustee. Contact Ira Smith Trustee & Receiver Inc. We are a full service insolvency and financial restructuring practice serving companies and individuals throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. We can help.
