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Senior Debt and Bankruptcy Changing Retirement Plans into Part-Time Jobs

November celebrated Financial Literacy month in Canada, a time when various organizations and businesses come together with events geared towards increasing financial education for all Canadians. The initial strategy this year focused specifically on the financial strain and rising bankruptcy rates facing seniors in our country.

To see evidence of the debt Canadian seniors are struggling with, you only have to look at your closest Walmart. More and more seniors are finding themselves having to seek part-time work after they’ve retired. This is a new trend that has not been seen in previous generations. So what has changed? Why are seniors today struggling more to make ends meet? There are many aspects that have contributed to the rise of senior debt levels. However, the most notable are likely a lack of financial literacy and preparing for future and major life transitions.

For a long time there has been the misconception that you could spend today and put away for tomorrow later. There would be time in the future to plan for your retirement. This led many people to buy the home of their dreams, new vehicles, pay for children’s education, etc, without really having a retirement plan in place. Unfortunately the future sneaks up on many people much faster than they anticipate. By the time they started to build their nest egg, they may be a mere few years away from needing it. As a result, they head into their retirement years with existing debt and limited funds to pay it off. This is forcing many seniors to work long after the age they expected to retire at, or sees them return to the workforce to cover expenses and increased living costs.

In recent generations, we’ve also seen a major shift in the lifestyle choices of all Canadians, including seniors. Previous generations did not have luxuries such as cell phone bills, multiple vacation properties or desire to travel in their retirement years, quite like they do today. We live in a society now where communication and travel is accessible to everyone. Seniors want to take part in that, which they should. Unfortunately 30 to 50 years ago they didn’t anticipate this shift in lifestyle and how much additional expense it would cost. Due to this, many Canadian seniors are living beyond their means, and when they hit retirement age many don’t, or can’t, admit they are struggling.

Planning for retirement can also become difficult when you are used to living a certain lifestyle. The reality of retirement income often requires that we make some changes, from spending habits to living arrangements. Be honest with family members about any financial strain so that they are aware of what your means truly are. Evaluate what is essential in your life and what can be reduced or eliminated to save costs. Be sure to include continued savings in your new budget so that there is an emergency fund available if needed.

While your retirement may not start off how you had dreamed it would, working with a proper financial plan and budget can help you manage your finances and stay out of debt to avoid bankruptcy. This way you can focus on making the most of your retirement and enjoy more of the free time it should provide.

Resources:

Building an Effective Budget

Read more Retirement, Seniors and Debt Advice.



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