About one-third of retired Canadians are in some form of debt, a report from Statistics Canada suggested Wednesday, throwing cold water on the notion that those in their golden years are debt free.

The study from the government agency showed that 34 per cent of retired individuals aged 55 and over, whether single or in a couple, held mortgage or consumer debt in 2009. The median amount owed was $19,000.

However, the debt level was much higher among those in the same age group who had not yet retired. The survey showed that among pre-retirees aged 55 and over, two-thirds held mortgage or consumer debt and their median debt load was $40,000, more than double that of retirees.

Among retired people with debt:

  • 25 per cent owed less than $5,000.
  • 32 per cent owed between $5,000 and $24,999.
  • 26 per cent owed between $25,000 and $99,999.
  • 17 per cent owed $100,000 or more.
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A Statistics Canada survey shows that about one-third of retired Canadians are in debt. ((iStock))

The study, which used data from 2009, showed that retirees who owned homes or who had higher household income, higher levels of education and better financial knowledge were most likely to hold debt.

But these same groups tended to have solid finances — as home ownership, income, and education were all associated with higher levels of net worth and lower debt-to-asset ratios.

The survey also showed that marital status played a part in overall finances. Divorced people who were retired had the highest incidence of debt at 43 per cent, followed by couples at 35 per cent, those who never married at 30 per cent, and widows or widowers at 28 per cent. Divorced retirees also had the lowest annual median income and net worth, compared to all the other groups.

"This [study] is suggesting that retirees are going into retirement holding debt," said Paul Ferley, assistant chief economist at RBC. "I think there had been a preconception that as people move into retirement years that they are generally debt-free, their mortgages paid off. Certainly that is not the case."

Making ends meet

Retirees with debt had a median annual household income of $42,000 and a median net worth of $295,000. Overall, their debt was equivalent to about seven per cent of their total assets.

The study said that a debt of less than $5,000 among retirees may be tied to the use of credit as a convenience, as 92 per cent of those with this amount of debt reported having consumer debt only.

Older retirees were significantly less likely to have outstanding debt: just 20 per cent of retirees aged 75 and over had some form of debt, compared with 48 per cent of retirees aged 55 to 64.

Despite the figures, the majority of retirees reported that their finances were what they had expected them to be prior to retirement. The retirees also claimed that their income was sufficient to cover their expenses and that they were able to make ends meet while still honouring their financial commitments.