Everyone taking on more debt, but older Canadians even more so

OTTAWA — Seniors are being lured by low interest rates into piling on more debt like younger Canadians — with possible impact on their future living standards —suggests a new paper on household finances.

OTTAWA — Seniors are being lured by low interest rates into piling on more debt like younger Canadians — with possible impact on their future living standards —suggests a new paper on household finances.

The TD Bank report released Tuesday, the third in a series, confirms that Canadians are piling on debt like never before. The latest figures from Statistics Canada shows that debt to income rose to a record high 149 per cent in the second quarter.

But the surprise is that Canadians 65 years and older are among the most active in the credit market.

“Younger Canadians, many of whom enter the housing market for the first time, continue to record the largest debt burdens,” noted the paper authored by Derek Burleton, the bank’s deputy chief economist.

“However, the bigger surprise surrounds the increasing indebtedness of those in or nearing retirement. In particular, the 65-plus age group racked up debt at three times the average pace” over the past decade.

As well, seniors, have been acquiring debt at double the pace of the value of growth in their assets.

Burleton says this may not be all bad, although it does add to risks that seniors will face financial difficulties in their retirement years.

With a squeeze on the value of their investments in recent years and rising food and energy costs, many seniors have resorted to so-called reverse mortgages to help finance their lifestyles.

Such loans are becoming increasingly popular and allow people over 55 to borrow against their home’s equity to get money for renovations, travel, paying off other debts and day to day living expenses.

Borrowers keep full ownership of their homes and can continue living in them with no repayments until they sell or move out. However, the debt piles up.

In the TD report,Burleton said seniors generally have lower overall debt and larger asset bases on which to fall back on.

As well, much of the debt appears to be going into purchases of real estate, including second properties, and debt used to fund asset accumulation is more sustainable than taking on debt to buy consumer goods.

Still, the paper points out that seniors risk over-extending themselves, since property values go up and down, but debt remains.

And not all the debt is going into real estate. The research shows seniors have also been buying more, or more expensive automobiles.

With low savings rates, inadequate pensions, volatility in the stock markets and longer life spans needing to be financed, Burleton says studies show that many seniors already face the prospect of a declining standard of living.

“Holding debt just adds an element of uncertainty over the financial outcomes of these older people,” he said.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A FedEx worker loads the 255,600 doses of the Moderna COVID‑19 vaccine which came from Europe into a freezer trailer to be transported during the COVID-19 pandemic at Pearson International Airport in Toronto on Wednesday, March 24, 2021. THE CANADIAN PRESS/Nathan Denette
Canada’s incoming supply of Moderna vaccine slashed in half through end of April

Procurement Minister Anita Anand says Canada’s incoming vaccine supply from Moderna will… Continue reading

Energy Minister Sonya Savage speaks during an event to mark the start of right-of-way construction for the Trans Mountain Expansion Project, in Acheson, Alta., Tuesday, Dec. 3, 2019. A committee that is supposed to consult Albertans on coal development in the Rocky Mountains won't be able to ask questions about water or land use. THE CANADIAN PRESS/Jason Franson
Alberta coal consultation terms of reference rule out land use, water concerns

Alberta coal consultation terms of reference rule out land use, water concerns

Brittany Lausen, RDC Students’ Association president. (Advocate file photo).
RDC Students’ Association takes aim at ‘period poverty’ in Red Deer

Vulnerable clients of several non-profits can access free hygiene products

A voter is shown at a Whitehorse polling station during the Yukon election on Monday April 12, 2021. An official count has confirmed a tie in the Yukon election, pushing the process to the next step of a judicial recount. THE CANADIAN PRESS/Mark Kelly
Official count confirms tie in Yukon election, application filed for judicial recount

WHITEHORSE — An official count has confirmed a tie in the Yukon… Continue reading

Lieutenant Commander Nicole Robichaud welcomes members of the Liberian Coast Guard aboard the HMCS Moncton for training with Royal Canadian Navy off the coast of Monrovia, Liberia, Africa. (Contributed photo by Corp. Ryan Moulton)
Red Deer-raised woman finds her sea legs as commander in the Royal Canadian Navy

Cdr. Nicole Robichaud started out as a local sea cadet

Red Deer Public Schools will not pilot the new draft curriculum at its elementary schools. (File photo contributed by Red Deer Public Schools)
UPDATED: Red Deer Public Schools says no to piloting new curriculum

Alberta Teachers’ Association support school boards

Dr. Wayne John Edwards, 66, died Tuesday at Chinook Regional Hospital. (Cornerstone Funeral Home)
Lethbridge doctor becomes 7th Alberta health-care worker to die from COVID-19

Dr. Wayne John Edwards, who was 66, died Tuesday at the Chinook Regional Hospital in the southern Alberta city

Alberta Premier Jason Kenney updates media on measures taken to help with COVID-19, in Edmonton on Friday, March 20, 2020. Alberta is set to join three other provinces in exploring the feasibility of small modular reactors as a clean energy option. THE CANADIAN PRESS/Jason Franson
Students in Alberta town ready to return to school after quarantining

ATHABASCA, Alta. — A superintendent of schools in northern Alberta says the… Continue reading

Dr. Wayne John Edwards, 66, died Tuesday at Chinook Regional Hospital. (Cornerstone Funeral Home)
Lethbridge doctor becomes 7th Alberta health-care worker to die from COVID-19

Dr. Wayne John Edwards, who was 66, died Tuesday at the Chinook Regional Hospital in the southern Alberta city

Britain’s Prince Charles, with Camilla, Duchess of Cornwall, visits the gardens of Marlborough House, London, Thursday April 15, 2021, to look at the flowers and messages left by members of the public outside Buckingham Palace, following the death of Prince Philip. (Jeremy Selwyn/Pool via AP)
Princes William, Harry won’t walk side-by-side at funeral

LONDON — Prince William and Prince Harry won’t walk side-by-side Saturday as… Continue reading

Tilray products such as capsules, oils, and dried marijuana are displayed at their head office in Nanaimo, B.C., on November 29, 2017. THE CANADIAN PRESS/Chad Hipolito
Vote by Tilray shareholders on Aphria merger deal delayed until April 30

NANAIMO, B.C. — A vote by Tilray Inc. shareholders on the cannabis… Continue reading

Prime Minister Justin Trudeau adjusts his mask as Minister of Environment and Climate Change Jonathan Wilkinson answers a reporter's question during an announcement on the government's updated climate change plan in the Dominion Arboretum in Ottawa on Friday, Dec. 11, 2020. THE CANADIAN PRESS/Justin Tang
Wilkinson urges opposition leaders to stop stalling net-zero carbon emissions bill

OTTAWA — Environment Minister Jonathan Wilkinson is urging opposition leaders to end… Continue reading

Gwynne Dyer
Opinion: Biden’s words have no meaning

“If they go, we’ll all have to go. That’s the reality of… Continue reading

opinion
Shadow pandemic: Domestic violence has risen worldwide

The COVID-19 pandemic has left a devastating mark on communities across the… Continue reading

Most Read