Monday, 26 August 2013

10 reasons why seniors are getting into more debt than any other age group

I thought we were supposed to get wiser with age? But it seems Canadian seniors are racking up debt faster than any other age group. Another reasons for young people to save more for retirement and for those reaching retirement to practice some self control over their finances.  An Equifax report called, Canadian ConsumerCredit Trends, details spending habits of Canadians during the second quarter of 2013. It found consumer debt in Canada rose by almost $77-billion, but year-over-year, but the group racking up the most debt is 65 and older. This group saw their debt increase by 6.5 per cent. Here’s why Canadian seniors are taking on more loans than anyone else.

  • Most Canadians underestimate the cost of retirement.
  • Retirement costs about 80 per cent of what your working years did.
  • You can’t borrow for your retirement
  • Canadians are living longer and healthier lives.
  • Many Canadian don’t have adequate health care to take care of their needs.
  • We spend most on healthcare in the last 10 years of our life.
  • Home prices have risen to record high making it easier to acquire large loans.
  • No matter your financial situation the theory is we should all be working less and resting more in retirement.
  • Seniors still want the luxuries they had pre-retirement- two cars, bigger house etc.
  • Many Seniors still have mortgages. 
Summary of the Equifax report:
The Canadian economic environment forecast is stable and slow in terms of growth, but positive and healthy given continued concerns related to the global economy. In the first half of 2013, the unemployment rate remained unchanged at 7.1%, annual inflation rate stayed low, GDP expanded by 0.6% and the Bank of Canada confined its key lending rate to stay at 1%, where it has been since September 2010. Canadian consumers continue to take on debt but with more responsibility as fears of another recession continue to become less realistic

Demand for New Credit

After some declines, consumer demand for new credit has picked up: in the second quarter of 2013 it is 2.6% higher than in the same quarter last year.
Year-over-year increases in new credit are seen in all regions with the highest experience in the Western region of over 5%. Average balance and limits of newly opened accounts have decreased this year.

Total Debt
Consumer debt continues to grow. As of Q2 2013, Canadian consumers owe $1,345.5 billion, compared to $1,326.4 billion in previous quarter and $1,268.7 billion a year earlier, an increase of 1.4% and 6.1%, respectively. On a debt classification basis, auto and mortgage sectors show the most significant increases of 8.6% and 7.4% year-over-year. Increases related to Revolving Loans are mainly due to secured loans.

Consumer Level
Average balance and limit per consumer continues to increase in all regions. Average debt is increasing in all age groups, especially for those 65 and older.

Delinquency
National 90 day + delinquency rate has consistently decreased in the past three years. As of Q2/2013, it is at 1.19%, one of the lowest values on record. The national trend is observed in all regions and major cities.


About Equifax Inc
Equifax  is a global leader in consumer, commercial and workforce information solutions that provide businesses of all sizes and consumers with  insight and information they can trust. Equifax organizes and assimilates data on more than 500 million consumers and 81 million businesses worldwide, and uses advanced analytics and proprietary technology to create and deliver customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates or has investments in 18 countries and is a member of Standard & Poor's (S&P) 500 Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. For more information, please visit 

Source: http://www.equifax.com/international/canada/documents/Equifax_Canadian_Consumer_Credit_Trends_Q2_2013-Web.pdf

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