Retired Seniors aged 55 and over
Average net worth of retiree = $295,000
Average annual retireee household income = $42,000
* 86% of retirees able to pay bills
* 82% of retiress able to meet financial obligations without a problem
Average debt of retiree = $19,000
** only one third of retirees have debts
** only 17% of retirees with debts over $25,000
** only 5% of retirees with debts over $100,000
Compare your pension with annual pensions of your local MP’s.
One in three retirees still in debt, but most happy with finances: report
OTTAWA – A comprehensive look at Canada’s five million retirees suggests Grandpa and Grandma are getting by financially in their golden years.
Yes, as many as one third are still in debt, but that means two-thirds are debt free. And of those with debt, one quarter of that group owe less than $5,000.
The results of the 2009 Statistics Canada survey may seem surprising in light of post-recession worries about rising debt, stock market losses and stretched private pension plans.
But Katherine Marshall, a senior researcher with the agency who analyzed responses from 3,730 seniors aged 55 and over, says the findings suggest those experiencing difficulties remain in the minority.
“Most retirees are debt free and a majority report high rates of financial security,” she said, while cautioning that any level of debt can add to financial insecurity among retirees, who have limited opportunities for increasing income.
That may be especially true for the just over five per cent of respondents, representing 281,000 retirees, who report still having debts of more than $100,000.
But the report also shows that retirees who owned homes and reported the highest annual income were the most likely to be carrying debt, in part because they could afford to.
The most encouraging findings are found in the section describing how retirees themselves describe their situation.
Almost 80 per cent said their current financial standard of living is equal to or better than what they assumed it would be before they retired.
Even more, 86 per cent, said their income was sufficient to pay the bills and 82 per cent said meeting their financial obligations was not a problem.
CIBC economist Benjamin Tal, who has written extensively on subject, said there is no question the majority of Canadian seniors have enough money to retire.
“The issue is not whether or not people are going to be able to afford to retire, the issue is that they will not be able to afford the lifestyle they would like,” he said.
The Statistics Canada study also deals only with retirement as it has been, not what it will be like in the next 15 years as the baby boomer generation comes to the end of the traditional working age.
Tal says baby boomers will have the demographic and political clout to shape retirement to their liking, including working longer, or moving to self-employment.
“The surprise will be how small a number actually choose to retire … and those who cannot afford to retire will simply continue to work and the news is that employers will accommodate that,” he said.
One of the surprisingly aspects of the Statistics Canada study in fact does show that Canadians 55 and over who are still in the labour force are carrying much bigger loads of debt than their retired counterparts.
Some of that may be by choice, but Marshall said other studies have shown about 40 per cent are those who feel they cannot afford to quit working.
Other findings in the survey are that couples tend to have less debt than divorced retirees, but those who were never married and widowers have even less debt. As well, the older Canadians get, the more likely they are to be debt free.
Of the 34 per cent who report having debt, more than half say they owe less than $25,000.
Overall, retirees have a medium annual household income of $42,000 and net worth of $295,000, and a medium debt of $19,000.
A drawback in the study is that it a one-time snap-shot so the agency cannot establish a trend to show whether the situation is improving or deteriorating. Marshall said comparing similar data to retirees in the United States does suggest Canadian seniors, on average, are more financially secure.