Study: Retiring with debt

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In 2009, 34% of retired individuals aged 55 and over, whether single or in a couple, held mortgage or consumer debt. The median amount owed by these individuals was $19,000.

The incidence of debt was much higher among those in the same age group who had not yet retired. Among pre-retirees aged 55 and over, two-thirds held mortgage or consumer debt and their median debt load was $40,000, double that of retirees.

Among retired people with debt, 25% owed less than $5,000, 32% owed between $5,000 and $24,999, while 26% owed between $25,000 and $99,999. At the high end of the debt scale, 17% owed $100,000 or more.

Retirees who owned homes or who had higher household income, higher levels of education and better financial knowledge were most likely to hold debt.

On the other hand, these same groups tended to have solid finances. Home ownership, income and education were all associated with higher levels of net worth and lower debt-to-asset ratios.

Divorced people (43%) who were retired had the highest incidence of debt. They were followed by people in a couple (35%), those who never married (30%) and widows or widowers (28%). Also, divorced retirees had the lowest annual median income and net worth, compared with all other groups.

Retirees with debt had a median annual household income of $42,000 and a median net worth of $295,000. Overall, their debt was equivalent to about 7% of their total assets.

A debt of less than $5,000 among retirees may be tied to the use of credit as a convenience. In fact, 92% of those with this amount of debt reported having consumer debt only.

Older retirees were significantly less likely to have outstanding debt. Just under one-half (48%) of retirees aged 55 to 64 had some form of debt, compared with 20% of retirees aged 75 and over.

The majority of retirees reported that their finances were what they had expected them to be prior to retirement. They also reported that their income was sufficient to cover expenses and that they were able to stay on top of bills and keep up with their financial commitments.

After controlling for personal and financial factors, those with any level of debt were found to be more likely to respond negatively to financial security questions. For example, 9 in 10 retirees without debt reported they had no trouble keeping up with bills and other financial commitments. However, among those with debt, 7 in 10 reported having no trouble.

Note: This study used the 2009 Canadian Financial Capability Survey to examine the financial situation of older Canadians with a focus on debt held among retirees aged 55 and over. Assets and debts were reported at the household level. The survey also included a series of questions designed to test the financial knowledge of respondents.

Definitions, data sources and methods: survey number 5159.

The article "Retiring with debt" is now available in the April 2011 online edition of Perspectives on Labour and Income, Vol. 23, no. 2 (75-001-X, free), from the Key resource module of our website under Publications.

For more information, or to enquire about the concepts, methods or data quality of this article, contact Katherine Marshall (613-951-6890;, Labour Statistics Division.

This edition also includes the article "The distribution of mortgage debt in Canada." The article uses the Survey of Household Spending to relate mortgage payments to disposable income and other household characteristics. For more information, or to enquire about the concepts, methods or data quality of this article, contact Raj Chawla (613-951-6901;, Labour Statistics Division.