In years past it was almost unthinkable for people in their seventies to have significant mortgage debt. According to a recent Debit in Retirement Study that Equifax Canada and HomEquity Bank recently conducted, mortgage debt for people in that demographic group increased by 12% between 2013 and July 2015.
The study took a look at all Canadians aged 55 and above. It took a look at the primary debt categories, including mortgages, credit lines, credit cards, retail shopping cards, auto loans and other bank loans, focusing on amounts of debt in 2013 and 2015.
Here are some of the key numbers that you need to know:
· Between 2013 and 2015, overall debt for people 70+ has gone up by 12%. For people who are under 70, debt still increased, but only by 4%.
· As of July 2015, seniors who carried a mortgage at age 71 or above had an average balance of $140,000.
· In the group of Canadian seniors aged 55+, the highest mortgage balance on average was in those ages 55-60 ($189,000). Those at ages 75+ had an average balance of $134,000.
· As of July 2015, 16.5% of everyone aged 55+ had a mortgage. This was an increase of 10% from 2013.
Why is this such a surprise? The vast majority of people in their seventies have fully retired, and they don’t have any way to elevate their income. Once people move over from living off salaries to living off pensions and fixed payments from retirement income, this can really cause problems.
If you’re currently still in your thirties and forties, the best thing you can do with this information is to start making sure that you have your retirement in order. If you haven’t bought a house yet but want to, you should consider doing so before you turn 40 or 45 – or buy a house that you can pay off in fewer than 25 years.
If you’re already a senior and are concerned about how you’re going to pay your mortgage off, one thing to consider is a reverse mortgage. This allows you to gain access to the equity that you already have – and you’ll never run out of equity as long as you remain in the house. Amansad Financial has a number of alternatives for helping clients find access to reverse mortgage solutions that can make life as a senior more comfortable without leaving debts as a part of their estate.
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