Talking ‘Bout My Parent’s Generation
My parents recently sold their house and moved five hours south just to be closer to their grandkids. But when they did so, the proceeds from the house that they had worked decades to pay off didn’t cover the cost of a house in Southern Ontario. They had to do, what was to them, the unthinkable: take out a mortgage to pay for the new house. It was a tough decision, but the only way for them to retire to the life they wanted.
According to a new study from RBC, four-in-10 Canadians over the age of 50 retired with debt and continue to apply for credit to augment their retirement. The results of the first annual Retirement Myths and Realities study found that:
- nearly 40 per cent of Canadians who are retirement-age (with assets of at least $100,000) retired with some kind of debt
- twenty-two per cent have a mortgage on their primary residence
- more than a quarter of respondents have applied for credit of some kind since retiring.
While this sounds like a bad thing, head of retirement at RBC, Lee Ann Davies, says that while Canadians are entering retirement with debt, it doesn’t have to be negative. Having access to credit can be good for managing cash flow and providing flexibility.
In the past two generations, a lot of things have changed. Where my grandfather worked for one company his whole adult life, had a guaranteed pension and health coverage, paid off his house as soon as possible; my parent’s generation wasn’t so lucky. So, I’m not particularly surprised that so many people are retiring with debt. I think that seeing as I don’t know a single person of my generation with a pension plan, the stats are going to continue to climb.
