Why are so many seniors declaring bankruptcy?

What’s even more alarming is that a lot of the seniors who are declaring bankruptcy (called “Grandpa Debtors" in the report) are dealing with credit card debt — on average, they owe $73,878 in unsecured debt. That’s a scary number when you consider that the average take-home pay reported for this group is just $2,133 a month. It’s really hard to imagine retiring with that high a debt load while facing a fixed income future.

Why is this happening? The survey gives a few reasons. Some were forced to retire early due to medical reasons or because their employer went bust. Some don’t reduce their living expenses to match their retirement income — and some are so lonely in retirement that they end up spending money to feel better. And of course more seniors are providing financial assistance to unemployed adult children.

The reality here is that too few Canadians are properly prepared for the financial reality of retirement. Unless you are Bill Gates or otherwise super wealthy, your income is going to drop when you retire — that means you have to adjust your lifestyle and choices.

The report makes four really helpful recommendations for anyone who’s approaching retirement. I think they make a lot of sense so I’ve shared them below: 

1. Prepare a detailed budget before you retire.

2. Do not retire with debt, even if it means selling the family home to avoid mortgage payments.

3. Figure out how you want to spend your time in retirement — what do you want to do now that you’ve finished working?

4. Give your adult children a reality check: you’re going to be on a fixed income so you won’t be able to help them financially the way you did when you worked full-time. If you do decide to help them out, don’t give away all your cash and if possible make it a loan, with realistic terms for repayment.