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Financial security 'elusive' for many Canadian families

Income security for many Canadian families is an "elusive dream" in the after-shocks of the recession, with those at the older and younger ends of the age spectrum in particular struggling.

The young are having a tough time entering the job market, as more than half of the net jobs created since the recession's low point have gone to those aged 55 and over, the Vanier Institute of the Family says in its annual review of the state of Canadian family finances to be released Thursday.

At the same time, older workers are having to either stay in the work force longer, or go back to work after retirement to make up pension shortfalls. The squeeze at both ends is putting further pressure on working-age parents.

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"More young people are living with their parents longer and staying in school longer," says the institute's CEO Nora Spinks. "Grandparents are spending increasing amounts of time in the work force. Parents are stretched, often providing care and financial support to both young and old, while trying to plan and save for their own retirement."

Older workers may be back in the labour market, but more of them – especially those living on their own – are declaring bankruptcy, a sign many have hit harder times. Seniors were 17 times more likely to become insolvent in 2010 than they were two decades earlier, the paper by author and consultant Roger Sauvé says.

Debt loads remain unusually high, with average family debt at $103,000 last year. There are 1.7 million Canadian families with a debt-service ratio of 40 per cent or more, "making them very vulnerable to rising interest rates or job loss," the report says, while cautioning consumers against carrying credit card debt in particular.

At the same time, family savings rates are still dwindling – to 4 per cent last year, or an average of $2,700 per household, compared with 13 per cent of disposable income in 1990.

Among the study's other findings:

· Increases in hourly earnings last year did not keep pace with inflation;

· Income inequality is growing as "the gap between the haves and have-nots continues to expand."

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· Five per cent of working Canadians hold down a second job, many of them turning to self employment to supplement a wage-paying job.

· Real estate now accounts for half of the net worth of Canadian households.

The study also examined the impact of inflation on households. Between 2002 and 2011, it calculates the country's consumer price index rose 20.2 per cent, led by price hikes of basic items like home fuel oil (which jumped 140 per cent).

At the same time, prices for many discretionary goods declined – such as recreational equipment and services, which tumbled by more than 42 per cent.

The lower the family income, the greater the impact of the increase in consumer prices, the report said. And shelter costs are gobbling up a greater share of household expenditures.

The Vanier Institute is a national non-profit organization that is based in Ottawa. Thursday's review is its 13th annual edition.

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About the Author

Tavia Grant has worked at The Globe and Mail since early 2005, covering topics from employment and currency markets to trade, microfinance and Latin American economies. She previously worked for Bloomberg News in Toronto and Zurich, writing on mining, stocks, currencies and secret Swiss bank accounts. More

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