Seniors and Debt

Just when seniors should be relaxing and enjoying the fruits of their labour, many find themselves struggling financially — an unsettling contrast to the ease they’d hoped to live their golden years.

What causes financial issues for seniors? How can we help our relatives and older friends avoid financial troubles as they move into their retirement years? What debt solutions are available for them right now?

Below are some of the most common reasons seniors fall into debt, along with practical tips to avoid debt from creeping up once they leave the working world behind.

Person calculating their debt on a calculator and laptop with paper spreadsheets on the desk

Causes of Financial Difficulties

Reduction in income. Transitioning into retirement can be a tremendous adjustment for many seniors. Especially if they will only be receiving government pensions. Adjusting to this new financial reality can lead to an increase in credit card use to supplement limited income — which will unfortunately also mean limited ability to repay debt.

Medical costs. With aging comes an increase of health-related issues. Healthcare will provide for most basic medical coverage. However, this does not usually cover specialized medications, medical supplies and devices. If they can’t afford supplemental insurance, these costs will come directly out of a senior’s already limited budget.    

Financially supporting family. Many seniors may feel obligated to lend money to relatives such as grown children or grandchildren whether they can afford to or not. If the senior is already on a limited income or feels pressure to borrow the money they subsequently lend, this can lead to significant problems down the road.

Gambling. Casinos are especially attractive for seniors because they can be fun, mentally stimulating and provide the opportunity to socialize without requiring much physical exertion. Unfortunately, these environments are also extremely effective at parting consumers with their money. Some harmless fun can quickly spiral into addiction and using credit to chase losses they couldn’t afford in the first place.  

How to Avoid Financial Issues Later in Life

Reduce debt before retirement. It’s almost never advisable to enter retirement with outstanding debt. If eliminating all debt before retirement is not possible, at the very least make and effort to understand what impact an income reduction will have on your ability to make payments and save for emergencies.

Create and stick to a budget. Retirement is the end of an era, not the end of your lifestyle. No matter how little or how much income you expect to receive, budgeting is the only way to stay on track financially.

Plan to pay down any outstanding debts as quickly as possible. Continue saving for irregular and unexpected expenses. Make room for any healthcare related costs that may begin to arise. And be sure to set something aside for the retirement activities or purchases you’ve been looking forward to.

Don’t lend money unless you can afford it. Be honest with yourself, your partner and anyone asking for financial help about whether you can afford to provide support. If you cannot, remember there is no value in needlessly making two households struggle financially.

Keep up your social life. With plenty of time on your hands, you now have freedom to get more involved in social activities. Many seniors’ centres have card clubs, food and coffee services, dances, community events and volunteering opportunities.

Reaching out and finding a supportive and likeminded social circle will keep you active, engaged and happy. It also prevents you from spending money you don’t have.

How Friends / Family / Caregivers Can Help

A senior’s social network can play a key role in helping them avoid getting into debt and connecting them with the help they need if the signs of financial trouble are present.

Are you noticing bills piling up in their home? Are they frequently visiting casinos or buying lottery tickets? Do they have enough groceries? Are they avoiding repairs to appliances or structures around the house? Are they taking good care of themselves?

If you suspect a senior in your community is experiencing financial problems, try discussing it with them to find out what support you can offer. If the problem is beyond your ability to help, connect them with a Licensed Insolvency Trustee to learn what options are available.

Life-Changing Debt Solutions

If you’re a senior who is struggling with debt — whether it’s debt you retired with or accumulated after the fact — you don’t have to face it alone. And it’s never too late to get the financial fresh start you need and deserve.

Schedule a Free Confidential Consultation with a Licensed Insolvency Trustee today to learn what options are available for you. During this no obligation initial meeting, you and the Trustee will review your entire financial situation, discuss your challenges and review your financial goals. The Trustee will identify some solutions to get you the resolution you need and deserve.

This could include a Life-Changing Debt Solution such as Bankruptcy or a Consumer Proposal, which could allow you to be debt free within as little as nine months. It could also include other counselling and financial services to help you better manage your finances and life and ensure your golden years can be your best years yet.

You’ve waited long enough for financial freedom. Reach out and make it happen today.  

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