Debt and Bankruptcy Keeps Would-Be Retirees Working LongerNov 24, 2014
November is Financial Literacy month in Canada, a time when various organizations and businesses can come together with events geared towards increasing financial education for all Canadians. However the initial strategy this year has kicked off looking specifically at the financial strain facing seniors in our country.
To see evidence of the rising debt and bankruptcy Canadian seniors are currently struggling with, you only have to look at your closest big-chain retail stores. More and more seniors are finding themselves having to seek out part-time work after they’ve retired. This is a newer trend that had 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 planning for their future and a major change in lifestyle.
For a long time there is a 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 still owing and limited funds to pay it off. This is forcing many seniors to work long after the age that they expected to retire at, or to have to return to the workforce when they realize they can’t afford to pay their bills.
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 very much 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 when they hit their retirement age and either don’t or can’t admit that they are struggling.
The solution to more financial security during retirement is to create a more aggressive budget and stick to it. This can be difficult to do when you are used to a certain lifestyle, but necessary in order to live comfortably. 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 stay out of debt and avoid bankruptcy so that you can enjoy your free time doing things you enjoy.