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More and more Canadians are retiring with debt, which has helped contribute to a demographic commonly known as “Grandpa Debtors”.  It’s not uncommon for the difficulties of carrying debt into retirement to snowball quickly for retirees.

The impact of “Grandpa’s debt” can even span generations, as many people are not aware of an aging loved one carrying debt until either a crisis, or a move to a retirement home is about to start.  The “sandwich generation” often pays a heavy price, as they are supporting younger dependents as well as aging parents, leaving them feeling ‘sandwiched’ between competing financial demands.

Vancouver Licensed Insolvency Trustee Blair Mantin of Sands & Associates discussed some of these challenges with Global News BC and shared some tips on how to manage debt as a senior citizen.

Watch the clip below, and read on for more information:

If you are struggling to manage your debts in retirement, or are helping an aging relative manage their financial affairs, here are some general tips on how to get your debt under control:

  • Get it Down on Paper
    • Figure out how much debt is owed, and to whom
      • Check for unopened mail and review any online statements
      • If accounts have gone to collections, call the lender or collection agency directly to get the details
    • To come up with a solution, it’s essential to know what debts you’re dealing with!
  • Make a Debt Plan:
    • Once you know the amounts, sit down and create a plan
      • Decide which debts should be paid off, in priority order (usually the ones with the highest interest each month)
      • Figure out how much is needed to cover debt repayment each month, and how long it will take to be debt-free
      • Draft a clear, realistic budget that will allow you to pay your expenses with the income you have available
    • Don’t be afraid to ask lenders for a reduction on interest – you might be surprised at the result!

Some people consider taking money out of retirement funds to pay off debt.  This may not be the best solution and it can create a tax consequence, or leave you falling short on money during retirement.  RRSPs are federally protected assets, this means you can’t be forced to cash in retirement savings to pay off debt. 

  • Stop Using Credit:
    • It will be impossible to pay off debt for good if you’re regularly incurring new debts
    • Consider and identify the reasons for having the built-up debt
      • Has the situation changed enough that using credit isn’t happening anymore?
      • If not, what could be done to improve your money situation?
    • Some problems may have simple solutions – for example, if a tax debt is due to a person working a part time job in addition to pension benefits, it’s straight-forward to have more tax deducted at source.
    • Other problems may be more difficult to solve – such as a debt due to co-signing or assisting another family member.  There may be some awkward (but necessary) discussions about whether this assistance can continue..

Many people feel embarrassment about what has caused their debt.  Don’t let that stop you from moving forward financially! 

  • Use Seniors’ Financial Resources:
    • Admitting that there is a problem that we need help with can be a very difficult step to take
    • Know that you are not alone, and that help is out there!
      • If suitable housing or high rent costs are issues, connect to organizations such as BC Housing;
      • If financial challenges are creating depression or anxiety, speak to your doctor, or a support group;
      • If debts are unmanageable, meet with a Licensed Insolvency Trustee.

Book your free confidential debt consultation with a BC debt expert today. 

Sands & Associates are an award-winning firm of Licensed Insolvency Trustees with offices throughout British Columbia.  As a legal authority in debt solutions since 1990, we believe that everyone is entitled to a financial fresh start with a debt-free future.