Financial Literacy Month starts with seniorsNov 04, 2015
Financial literacy for seniors is one of the top priorities for the Financial Consumer Agency of Canada (FCAC). The FCAC has dedicated Phase 1 of its national strategy for financial literacy to helping seniors understand and manage their finances. And with debt for seniors rising faster than any other demographic in Canada, there is a clear need for programs aimed at helping this age group manage their money and pay down debt.
One such program, Your Money Seniors, was recently launched by the Canadian Bankers Association in partnership with the FCAC. The program contains three modules on cash management, financial abuse and fraud prevention, and offers seminars for seniors by bankers across the country. And yes, managing debt is included in the module on cash management.
How financial literacy helps seniors
Yet there is more to financial literacy than managing debt. In its national strategy, the FCAC outlines how current and future seniors would benefit from increased financial literacy. According to the strategy’s Phase 1: Strengthening Seniors’ Financial Literacy, financially literate seniors are more likely to:
- · Better prepare for retirement by building personal savings and assets
- · Make sound decisions about when and how to retire
- · Choose financial products that make the most sense for their needs
- · Plan for and cope with major financial decisions related to life transitions
- · Navigate and better understand how public programs and services can help them
- · Recognize and protect themselves against financial abuse
- · Determine the appropriate advice and supports to help with financial decisions and with managing their finances
With increasing challenges like carrying mortgage debt and supporting adult children financially, many Canadian seniors are delaying retirement or continuing to work part time. As we near the end of 2015, Financial Literacy Month is a good time for seniors to reflect on their debt and re-examine their finances. If you’re a senior who added to your debt this year, you’re certainly not alone—Canadians aged 65 and olderincreased their debt by nearly 5 per cent in the second quarter. Nevertheless, it’s a good idea to take a look at your financial plan periodically and see if there are any areas where you could make some changes in your spending habits.
How would an interest-rate increase affect you?
The new Canadian government has promised it would boost the economy through spending, which might mean that interest rates could rise sooner rather than later. This could be good news in some regards for seniors. At the current low rates, fixed-income and guaranteed investments haven’t been generating the kind of returns seniors had been used to in past decades. But a rise in interest rates would also see rates increase on variable-rate loans and mortgages. For seniors increasingly dealing with mortgage debt, this means the cost of servicing those debts would also go up, if they had chosen a variable-rate mortgage.
The FCAC has several resources that can help stress test debt loads, including an interest rate worksheet and a mortgage calculator tool. While financial literacy is brought to the forefront in November, this federal government agency provides tools and tips that can help seniors, and all Canadians, deal with debt year-round. We encourage you to visit their website at http://www.fcac-acfc.gc.ca/
How do you plan on strengthening your financial literacy during #FLM2015? Share your thoughts with BDO by joining the conversation on Twitter using #LetsTalkDebt #CountMeInCA