retirement income planning Archives - Ira SmithTrustee & Receiver Inc.

Seniors are carrying debt – Background

Seniors are carrying debt. Senior finances are nothing short of alarming. How will retirement look for you? Will you be taking part in wonderful retirement activities such as traveling the world in style? Will you continue to work in one of the jobs for retirees? Will you be at home living in poverty on a meager government provided pension?

This is such a serious issue that we have written a series of blogs on the topic which delve into WHY seniors are carrying debt.

Seniors are carrying debt – What is the current situation?

The latest facts and figures will not offer any comfort I’m afraid. According to a report by the Broadbent Institute on seniors’ finances:

47% of Canadians aged 55 to 64 don’t have an employer pension plan
50% of Canadians aged 55 to 64 who don’t have an employer pension have less than $3,000 saved up for retirement
Of the Canadians without an employer pension plan those who earn $50,000 to $100,000 a year have saved up an average of $21,000
Of the Canadians without an employer pension plan those who earn $25,000 to $50,000 a year have saved up an average of $250
Less than 20% of people over age 55 who don’t have an employer pension have enough to live in retirement for five years or more
The poverty rates for single seniors, especially for women, is nearly 30%

If seniors are carrying debt, will seniors be living in poverty?

According to Rick Smith, executive director of the Broadbent Institute, “This new data on retirement savings and gaps in support makes one thing perfectly clear — we have a retirement income crisis on our hands that requires urgent government action now.” The reality is seniors are carrying debt and it’s time for the federal government to step up to the plate and in a meaningful way, increase the amount of money we give seniors. Having seniors living in poverty in the greatest country in the world is just not acceptable.

What can I do now to avoid being a senior living in poverty?

The sooner you address debt issues, the better. Eliminating debt is an excellent first step. Contact the Ira Smith Team. We’re professional, federally licensed trustees who can help you conquer your financial problems so that Starting Over, Starting Now you can put debt behind you and start saving for the future.

Does hoarding cash = debt free living?

Debt free living is certainly elusive for many Canadians. We have grown fearful about the volatility of the stock market and the future of the resources industries. As a result, instead of investing they are hoarding cash. According to a recent report from CIBC World Markets:

Canadians are holding a record $75 billion in extra cash that would have normally been invested

$75 billion represents almost 10% of the total value of overall personal liquid assets in Canada

Personal cash positions were at a record high at the end of 2015

Cash holdings are up 11% over the past year

The rise in cash holdings is attributed to risk aversion

People 35 years old and younger hoarded the most money, as a proportion of their total wealth

Notwithstanding all this extra cash, Canadians have the higher debt per capita of all time and have not allocated any of the cash for debt free living

How can hoarding cash effect your retirement?

Low-yield bonds and heavy debt loads may leave you coming up short in retirement, which is becoming more expensive to fund. According to CIBC deputy chief economist Benjamin Tal, many older people, 60, 65 and 70 need to be in the stock market to get a reasonable return. Just GICs will not do because interest rates are so low. Yet it’s a vicious cycle; the TSX has fallen 6.7% since the beginning of the year and is at a two-year low.

We can help with your debt free living plan

We can’t stabilize the stock market, nor can we positively impact the future of the resource industries. But, we can help with debt. The Ira Smith Team is comprised of professional trustees with a cumulative 50+ years of experience dealing with diverse issues and complex files. Your heavy debt load is something we can manage with immediate action and the right financial plan. You can’t have a carefree retirement dragging around a mountain of debt but with one phone call you can be on your way to a debt free retirement Starting Over, Starting Now. Don’t delay. Contact us today.