A fresh report from Equifax showed that debt excluding mortgages among Canadians aged 65 and above sat at an average of $15,244 by the fourth quarter of 2016. The study added that despite the amount being below the national average of $22,113, the retiree demographic exhibited the greatest year-over-year growth in the amount borrowed, at 6.1 per cent.
Credit Counselling Society president Scott Hannah told The Canadian Press that the number of people aged 55 or older seeking help at his organization has swelled to 21 per cent of the society’s client base compared with five per cent 20 years ago.
“That’s significant and worrisome because unlike people who are working like you and me, many of these people are on fixed incomes,” Hannah said. “We see things like people taking on debt because they need a new roof and I can appreciate that because if the roof is shot you’ve got to fix the roof.”
However, Hannah stressed the importance of considering alternative solutions that might prove more appropriate to the situation. “Does it make sense to stay, for example, in a home that you can’t afford?”
BMO InvestorLine divisional manager Larry Moser suggested accessing equity as a reliable solution.
“A lot of retirees are house rich and cash poor and perhaps that’s the most easily accessible option,” Moser explained, adding that retirees looking to borrow money should have an exact amount in mind.
“The danger of putting a line of credit against your house is if your intention is to only borrow $200,000, but you put a $500,000 line of credit against your house, you have to have the discipline to tell yourself my intention was to only borrow $200,000.”