A new study by TD Bank released Tuesday says seniors are piling up debt at a faster rate than the general population, and that some may find that cuts into their standard of living in retirement.

The bank said typically people ease off on taking on new debt and build up assets in order to have enough income once they leave the workforce.

But the TD’s study of data over the last decade suggest that while average debt loads in Canada increased at twice the pace of income, the debts of seniors grew at three times that rate, and contributed as much as half to the overall debt growth.

As well, Canadians aged 45 to 64 and approaching retirement tended to show an above-average tendency to hold debt later in life, suggesting the trend may not be temporary.

One explanation may be that Canadians 65 and over have been tempted by historically low interest rates to buy property.

Investment in real estate by seniors has grown at a faster rate than the average across other age groups, with average holdings doubling since 2002.


TD’s study suggests that seniors are tending to hold debt later in life.

Low interest income and sharp equity losses in recent years, it said "have provided an added incentive to diversify portfolios into real estate."

Those aged 44 to 64 and 65 and above were the only age groups where debt grew at a faster rate than assets.

As a result, the usual measures of household financial health — the ratios of debt to income, debt to assets and debt to home equity — have been deteriorating since 2002, the study found.

The analysis found other reasons for increased debt, aside from real estate investment.

In the last five years, seniors have put more money into cars and have extended their lines-of-credit.

While seniors are better positioned to withstand a downturn because they tend to owe less than other age groups and have more assets to use as collateral, the study said, "the fact that Canadians are entering retirement with more debt raises questions about their long-term financial security."

TD argued that some Canadians who already face a declining standard of living because of lower savings rates, swings in financial markets, pension fund deficits and smaller pension benefits, may find their challenges even tougher because of growing debt.