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Ugh, it's getting tougher to be debt-free, particularly for seniors

Briefing highlights

  • It’s harder to shed our debts
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Freedom 70-90?

Canadians are finding it ever harder to shed their debts.

And in a worrisome sign, seniors are finding it particularly hard as they carry what they owe into retirement.

A new study by Statistics Canada shows 29.6 per cent of Canadian families were debt-free last year. That's actually better than the 28.9 per cent from the 2012 survey, but pales in comparison to the 32.7 per cent of 1999.

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For those age 65 and up, the comparisons are more stark: Just 58 per cent of "senior-led families" could boast of being debt-free in 2016, far short of the 72.6 per cent in 1999, though, again, marginally better than in 2012.

The Statistics Canada survey is yet another piece of the picture for those who track household credit in Canada, where the debt burden is among the highest in the world.

"Among senior-led families with debt in 2016, their median debt was $25,000," the federal agency said.

"More senior-led families were also carrying mortgages into their retirement years. In 2016, 13.9 per cent of families led by a person aged 65 and older held a mortgage, compared with 7.7 per cent in 1999."

The Statistics Canada survey matches what the Credit Counselling Society is finding on the ground, which are "growing debt levels across all age demographics to the point where over 50 per cent of those contacting us for assistance are overwhelmed by their financial situation," said its president, Scott Hannah.

"We are also very worried about the deteriorating financial health of Canadians 55+, which now make up 21 per cent of our new clients each year," Mr. Hannah added.

"To put this in perspective, 20 years ago our clients aged 55+ only made up 5 per cent of our overall new clients. Canadians are finding it more difficult to retire debt-free or have sufficient savings on hand to manage a reasonable standard of living in retirement, which is why we see many seniors take on debt."

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There are many reasons for this phenomenon, Mr. Hannah said, citing the "deterioration" in defined pension benefits as feeding into it.

Mr. Hannah found the Statistics Canada survey interesting. But, as he put it, "the devil is in between the lines."

He cited two other reports from Canadian groups, one suggesting that it's not just huge mortgage debt burying consumers, but also other credit. Another, Mr. Hannah added, confirmed the increase of debt among seniors.

We appear to be handling those debts at this point, nonetheless, according to a recent report from Equifax Canada that showed the delinquency rate falling in the second quarter to 1.09 per cent.

There's another side to this story, of course, and it's one that looks much better.

The median net worth among families rose 14.7 per cent from 2012 to $295,100. That, in turn, was well above the $144,500 of 1999, which you'd expect.

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ProvinceMedian net worth in 2016 ($)Median net worth change (%), 2016 over 2012
Manitoba320,80035.2
Ontario365,70030.5
Prince Edward Island204,00028.6
Newfoundland and Labrador211,80019.6
British Columbia429,40018.3
Nova Scotia225,20011
Alberta290,5002.9
Saskatchewan293,5002.5
Quebec208,9000
New Brunswick158,400-14.2

Source: Statscan

Note: In 2016 constant dollars

By city, Vancouver ranked first last year, at $434,400 followed by Toronto at $365,100 and Calgary at $339,400.

"Differences in the value of homes determines, in part, provincial differences in net worth," Statistics Canada said.

"The median value of principal residences in British Columbia was $550,000 in 2016, the highest value in the country and $105,000 more than the next highest, Ontario.

The total value of our assets was $12-trillion, and total debt almost $1.8-trillion.

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