Golden Age of Retirement, enjoying the luxury of pensions, savings, investments while spending the winters in Florida on the golf course. Sounds like the dream of many of us as we edge toward retirement.
In actual fact, the retirement road currently enjoyed by our parents is not the same road and is unlikely to have the same outcome for our “pre-retirement” generation. Statistics are showing our road will have a few road blocks, speed bumps and maybe under construction. As the new road to retirement is suffering from unexpected external pressure, in the form of new debt burden.
The average bankrupt according to statistics released is 43 yrs old man with more than $60,000 in unsecured debt. In 2009 the average age was only 41.
In a recent report, the most at risk group is the pre-retirement debtors. The group with the highest level of debt is 50 to 59 years old. Normally this age bracket is rapidly paying down debt. However, now they find themselves supporting aging parents, adult children still living at home. Their woes do not end there, this group has the added burden of decimated investments and pensions and reduced real estate equity.
Band-aid solutions to the financial stress has been to borrow more, suppliment incomes with lines of credits, credit cards and financing household purchases. All amounting to record levels of debt in excess of $60,000.00 per person. The servicing cost for this level of debt is high with many deciding to claim bankruptcy or file a consumer proposal to reduce the debt levels.
Moving forward will retirement planning now involve conversations with bankruptcy trustees? Understanding options is important, especially before liquidating remaining RRSP funds to pay down debt. Trustees in Bankruptcy will show you options that will reduce the overall debt burden at the same time allow you to retain assets.