Household debt isn’t only for the young—it’s rising faster for seniors

In June, Canada’s debt-to-income ratio hit a record high of 164.6 per cent after making its largest jump (from 163 per cent in March) since 2011. This means that Canadians owe, on average, $164.60 for every dollar they earn. For comparison’s sake, U.S. household debt peaked at 165% in 2007. With the latest numbers, we have effectively caught up to the pre-housing-crash, subprime-mortgage Americans. You might remember how that story ended for many.

Here in Canada, it’s not just millennials and young families who can’t keep up with the high cost of housing. A recent study found that seniors over 70 have an average mortgage balance of $140,000 and that their debt has increased by 12 per cent over the past two years. This matches another Equifax survey that found seniors are increasing their debt loads much faster than the rest of the country—including a nearly five per cent jump in the second quarter of this year.

More seniors now have mortgages

Housing is one of the biggest contributors to the rise in senior debt, just as it is for all Canadians. Mortgage debt makes up 80 per cent of all household debt for Canadians, accounting for $17.7 billion of the $26.3 billion borrowed in the second quarter alone. The number of seniors with mortgages has risen by 20 per cent over the past two years, and there are now roughly 1,870,000 Canadians older than 55 that are still making mortgage payments.

While conventional wisdom states that seniors should be downsizing their housing in retirement, that doesn’t seem to be happening, as some are using debt to pay for nicer homes. Also contributing to senior debt could be that two-thirds of Canadians have been dipping into their retirement savings to support their adult children. If parents are spending money on their kids’ groceries and cell-phone bills, they will have more difficulty reducing their debts before or during retirement.

Financial literacy for seniors

Seniors also have other financial concerns to worry about, whether it’s a lack of pension income, costs of long-term care, or the potential for financial abuse. As a result, the Financial Consumer Agency of Canada (FCAC) has committed to strengthening seniors’ financial literacy as part of its national financial literacy strategy. The FCAC’s senior strategy sets out four goals to improve financial literacy for our seniors:

  • Engage more Canadians in preparing financially for their future years as a senior
  • Help current seniors plan and manage their financial affairs
  • Improve understanding of and access to public benefits for seniors
  • Increase tools to combat financial abuse of seniors


Among other initiatives, the FCAC is seeking to promote financial literacy and retirement planning in the workplace, provide a free financial literacy program for seniors, and conduct a three-year study on financial abuse. With Canadians living, working and remaining active longer than before, the need for financial literacy for seniors and other households dealing with debt and others approaching retirement will only keep growing.

Are you retired or nearing retirement? Do you still have a mortgage? Share your thoughts with BDO by joining the conversation on Twitter using #LetsTalkDebt #BDOdebtrelief