What the Census Says About Debt and Retirement

According to the latest census, over 65 per cent of Canadians are saving for retirement—whether in an RRSP, a TFSA or a Registered Pension Plan. This includes nearly three quarters of Canadians between the ages of 35 and 54. And since it’s the census, you know these numbers are pretty accurate.

On the other hand, the census found that more seniors are living on a low income. Currently, 14.5 per cent of Canadian seniors find themselves in a low income household, up from 12 per cent the last time. So while most Canadians are putting money aside, some of those who’ve reached the age of 65 are still struggling to get by.

What is a low income household?

The definition of a low income household depends on the number of people living in it. According to the census, a one-person household earning less than $22,133 after tax is considered low-income; for a two-person household, it would be anything below $31,301. Across the country, we see that anywhere from seven to over 15 per cent of adults—and an even larger number of children—are living in a low-income household.

While StatsCan does not offer a province-by-province breakdown of low-income seniors, their number is higher at the national level than low-income adults overall in most provinces.

Seniors are adding more debt than the rest of the country

A separate study from Equifax Canada found that the average debt of Canadians over 65 is $15,651—and that doesn’t include mortgages. Although this number is much lower than the average amount all Canadians owe, it’s also growing much faster. Seniors’ debt has increased nearly 5 per cent in the past year.

In Canada, seniors’ debt has increased nearly 5% in the past year. #DebtSolutions Click To Tweet

The good news is that seniors seem to be better at paying their debts than the average Canadian. The debt delinquency rate for seniors is lower than the rest of the country, and it’s actually fallen 7.3 per cent in the past year. So, even though seniors are taking on more debt, they are also getting better at making their payments on time.

Why you should pay off debt before retirement

Although it’s not always possible, it would be best to pay off debt before retirement, or reduce your debt as much as you can while still working. In most cases, retired Canadians will be earning less than when they were working, and they’re often living on a fixed income—a government or private pension, withdrawals from an RRIF or annuity, along with government benefits. This can make it harder to pay off debt while meeting regular monthly expenses.

However, just because you’ve retired from the workplace, you don’t necessarily have to stop working. Taking on a part-time job can help you pay off debt and make ends meet after you kiss the corporate gig goodbye, and your options aren’t limited to Walmart greeter. The gig economy offers plenty of opportunities to pick up part-time work—whether it’s running errands, tutoring or taking photographs. If you have a particular passion, chances are, there is an app for that.

Not sure how much you’re earning in retirement? Try the FCAC’s Canadian Retirement Income Calculator.