sandwich generation Archives - Ira SmithTrustee & Receiver Inc.

There are various reasons why baby boomers debt is so high. According to the 2011 Canadian Census, 9.6 million persons, or close to 3 Canadians out of 10 (29%), were baby boomers. Baby Boomers, the generation born between 1946 and 1964, face challenges unlike any other generation before them. Sometimes referred to as pre-seniors, the sandwich generation (taking care of children and parents), and the club sandwich generation (taking care of grandchildren, children and parents), many Baby Boomers are finding themselves ill prepared for retirement.

They expected to have their children off their payroll prior to retirement and never anticipated the financial burden of caring for aging parents and sometimes their grandchildren. Their defined pension plans have all but evaporated and they are left with huge financial responsibilities and a diminishing income. And sometimes, life just got in the way due to divorce or illness. These are many reasons why baby boomers debt is so high.

According to a BMO study:

Baby Boomers are about $400,000 short of their retirement goals.
The average Baby Boomer feels they need about $658,000 to retire on, not including Canada Pension Plan and Old Age Security money they’ll also get coming to them. However, the average amount they have saved so far is about $228,000.
71% Baby Boomers said they plan to work part time in retirement to earn extra income.
44% will sell off their valuable goods, such as antiques or possessions they don’t use.
33% plan to sell their home to help make ends meet.

The Canadian Payroll Association (CPA) came to similar conclusions. Their study showed that the long term financial outlook for many Canadians is troubling because there is a huge gap between how much money people say they will need to retire and how much they are actually saving for retirement. In addition 40% of employed Canadians still are spending all of or more than their net pay and many are living paycheque to paycheque. Many Baby Boomers of retirement age are retiring with alarming levels of debt, or not able to retire because of their baby boomers debt.

If you’re a Baby Boomer with serious baby boomers debt issues, contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now we will evaluate your situation and offer practical advice so you can clearly see the way to move forward.

Last week we discussed “What Do The Golden Years Really Look Like”?This week we’ll be addressing why the majority of seniors are in debt and provide help for seniors in debt.

Seniors are facing a myriad of financial issues that have made their anticipated “golden years” anything but golden.

The Sandwich Generation: Many are still part of the “sandwich generation” a phenomena caused by delayed marriage, postponement of children, and adults with increasingly long-lived parents. They’re borrowing to help their children, grandchildren and parents. As long as they have collateral and a good credit rating, banks will readily lend them money.
Grey Divorce: According to Statistics Canada, divorce among couples 65 years of age and older is becoming more common and grey divorce can create serious debt for boomer retirees.
Recession: Battered financial markets and anaemic economic growth have forced Canadians to make debt management and not retirement the primary focus of financial planning. Their investment returns may have been decimated by the recession and they borrowed hoping markets would stabilize.
Lifestyle Choices: Even though they’ve reached 65 and their incomes have been greatly reduced, they continue to live the same lifestyle that they lived prior to retirement. With reduced incomes, often coupled with increased expenses, they are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle they may no longer be able to afford. Seniors with credit card debt adapt by making only the minimum monthly payments on credit cards, which leads to a downward debt spiral, a journey that often ends with a trip to a trustee in bankruptcy.

The problem with carrying debt into retirement is that it must be serviced with less income than when working full-time. Mid-career people can start over, but retirees can‘t. If you are now facing serious debt issues contact Ira Smith Trustee & Receiver Inc. We can help you get your life get back on track. Starting Over, Starting Now you can take the first step towards an enjoyable retirement. Watch for our next blog when we’ll be discussing if seniors should try and pay off the debt or declare bankruptcy.