Kitchener seniors declaring bankruptcy more than others: debt expert
In Kitchener, seniors are the fastest-growing demographic filing for bankruptcy, and signing consumer debt proposals, according to a local financial expert.
This, as the Broadbent Institute warned this week that only 15 to 20 per cent of middle-income Canadians retiring in the next decade, without an employer pension plan, have saved anywhere near enough for retirement.
That means the number of people spending their senior years in poverty will get worse in the coming decades, the think-tank said.
But Mike Braga, debt-help professional and vice president at BDO's Kitchener office, said he's seeing signs that's already happening.
"In our office here in Kitchener, seniors are the fastest growing population of individuals that are coming in for a bankruptcy or proposal. Which is a scary thought," he told CBC news.
"Part of that is because they haven't saved enough for RRSPs," he explained.
Canadians within 10 years of retirement are supposed to be at their peak savings years, but the Broadbent Institute report found the median value of retirement assets of Canadians age 55 to 64 is just over $3,000.
No wiggle room in the budget
Another problem, said Braga, is how dangerously close most Canadians are to falling into serious debt.
A recent Ipsos Reid poll conducted on behalf of BDO revealed that 62 per cent of households wouldn't be able to make ends meet if their monthly debt payments increased by just $300 a month.
"That's an extremely low threshold," said Braga.
"Currently, we're at a point in time in history where interest rates are significantly lower than they have been. When those interest rates start to go back to normal rates, in the next 10 to 15 years, that $300 is going to be in the form of additional interest payments.
"And people are going to default on their loans simply because of the interest rate increase, and the fact that our budget is so tight."
The survey was conducted between Jan. 5 and 8, 2016, and consisted of 1,007 Canadians from Ipsos' Canadian online panel. The sample is considered reflective to within +/-3.5 percentage points had all Canadians been surveyed.