# Seniors going bankrupt in soaring numbers



## james4beach (Nov 15, 2012)

This article says that the 65-and-older age group is experiencing a huge increase in bankruptcies (20.5% increase in bankruptcies since 2010)
http://www.cbc.ca/news/business/seniors-going-bankrupt-in-soaring-numbers-1.3129176

Many people seem to believe that strong demand for stocks from retirees will provide perpetual buy-side pressure to the stock market for many years to come. I believe the opposite; baby boomers and retirees will *need to liquidate* their stock holdings in the coming decades. I think this will provide persistent downward pressure on the stock market for quite some time.


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## carverman (Nov 8, 2010)

james4beach said:


> This article says that the 65-and-older age group is experiencing a huge increase in bankruptcies (20.5% increase in bankruptcies since 2010)
> http://www.cbc.ca/news/business/seniors-going-bankrupt-in-soaring-numbers-1.3129176
> 
> Many people seem to believe that strong demand for stocks from retirees will provide perpetual buy-side pressure to the stock market for many years to come. I believe the opposite; baby boomers and retirees will *need to liquidate* their stock holdings in the coming decades. I think this will provide persistent downward pressure on the stock market for quite some time.


Lack of reality check. Seniors over 60, should be planning worse case, not some dream that their health and personal finances will go on for the next 25 years and they will have enough to eat and drive their fancy cars. Bad things happen in life and that can change their perspective in a "New York minute".

There is a TV ad these days that mentions "25,000 sunrises..that's all you get...some more, some less" and that is the reality of life. 
If you divide that number by the number of days in a year (365)... the reality sinks in..68.5 years..... on average that is. 
Once you get past 60, there isn't enough time to catchup on any major financial losses. 

Here is one quote from the CBC article", and it can be considered a good one to live by.



> "When it comes to senior debt, the more we understand about our own expenses and our own financial situation in adulthood, the better equipped we will be to be able to handle the future and less likely to fall into financial difficulty," she says.


Too much easy credit availability, to easy to get into trouble, seniors wanting to live high off the hog instead of downsizing, financial support of children that are not doing so well in their lives, the state of today's economy, and many other factors will continue to increase the number of seniors in financial difficulty.

Of course there is always the "Wouldn't it be nice"...ads that beckon seniors to use the equity in their homes for tax free cash..a reverse mortgage that gives them a chunk of cash at the beginning of their senior years that runs out if they happen to live longer than 15 years or spend it at a faster rate.
IE: "We got $50K dear, from the Home equity plan..lets plan that trip to Europe that we always wanted to do...or perhaps go on a safari in Africa too?"

In the end, when they go bankrupt and everything of monetary value is gone..they can depend on the government to look after them in the government
sponsored 'hospices' that tend to "speed them on their way"..with lots of medication. 
http://www.cbc.ca/news/business/seniors-in-ontario-make-up-30-of-bankruptcies-report-1.3060463

I have a movie starring Charlton Heston called Soylent Green.....a uh...what one would say a futuristic society..... with the ultimate recycling scheme.:biggrin:


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## OhGreatGuru (May 24, 2009)

The baby boomer generation is also now entering this demographic, and too many of them did not inherit their parents' attitudes about personal debt.

This is also another case of "Lies, Damn Lies, and Statistics".

The population of persons 65 and older in 2009 was 4,687,400. In 2014 it was 5,584,000. That's a 19% increase in the absolute number of people in that demographic. So is a 20% increase in the number of bankruptcies really significant? 

(Actually, it was not even a 20% increase in the absolute number of bankruptcies. The 65+ demographic accounted for 8.3% of insolvency files in 2010, and 10.4% in 2014. That's where the article gets its "20% increase" from. If fewer younger people are going bankrupt, the percentage for the 65+ demographic goes up, even if their rate of bankruptcy doesn't change.)

As a percentage of the overall population, the 65+ crowd grew from 14% to 15.7% from 2009 to 2014. So, as a proportion of the total population, they have increased 12% in 5 years.

The total number of insolvency files for Canada - all ages, dropped from 128,189 in 2010 to 121, 278 in 2014. (From the same annual insolvency reports of the Dept. of Insurance) A drop of 5.3%. If the total number of insolvencies had dropped 50% by 2014, but with the same age distribution, the 65+ crowd would show the same "apparent" (but misleading) 20% increase. 

In order to be statistically meaningful (wrto determining a trend), the data must translate the number of insolvencies to the number of insolvencies per capita in each age group. This is not done in the report quoted in the article.


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## fraser (May 15, 2010)

I see it in my spouses family. Out of her 5 siblings 2 cannot afford to retire or pay mortgage/line of credit. They will be selling their homes and downsizing considerably-perhaps to rentals. A third could be on the edge. The remaining two siblings are fine...one with a good pension the other has been financially preparing for the past 10 years. 

I think that it makes my spouse feel somewhat guilty that we are financially secure in our retirement. It seems to me that when you are nearing retirement the chickens come home to roost as it were. By then, it is too late to effect very many meaningful changes to your financial situation other than on the expense side.
Shame really. 

What I find especially interesting is that 5 of those 7 children of the two siblings who have absolutely no financial resources to speak of have/are not doing much with their own lives. Staying in their home towns, working minimum or near minimum wages with no real post secondary training Shame really to see this repeating itself in the following generation when it could have turned out much differently for each of them.

It is all about life choices and how the ramifications of those choices sneak up on you so quickly.


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## Itchy54 (Feb 12, 2012)

I actually laughed out loud when I read the above mentioned quote about how we should know our expenses and financial situation in adulthood...ummm, really, someone has to tell people that??
I read some of the comments to that article and was mad...the ones I read (I got mad and stopped reading) blame the government for their bad spending habits and lack of money. This drives me MAD.....I just don't get that attitude.
Hubby (who will retire in nine months) and I have been looking at our future life for years and years. Lots of spreadsheets and "what ifs". I thought this was normal. Apparently not.

whoops, I said mad a lot!!


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## My Own Advisor (Sep 24, 2012)

Itchy54 said:


> I actually laughed out loud when I read the above mentioned quote about how we should know our expenses and financial situation in adulthood...ummm, really, someone has to tell people that??


For some, yes! 

Adulthood should not be equated with maturity, far from it, let alone financial maturity.


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## Rusty O'Toole (Feb 1, 2012)

Artificially low interest rates are killing seniors investment plans, killing pension plans and killing returns for conservatively run investment funds. The alternative is to chase alpha, make wilder and wilder bets on shakier junk bonds and stocks hoping to catch a gainer big enough to outweigh the losses on the conventional bond portfolio.

It should have been obvious 6 years ago this could not end well. If you think things are bad now just wait.


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## My Own Advisor (Sep 24, 2012)

...Or build a portfolio whereby you could live off dividends or distributions and not have to deplete your capital until you want to, not need to.

Sadly, this is going to get worse. Much worse. 

What happens when these house-rich and cash poor seniors need to sell their home?

Spend less, work longer, save more or all three if you can. Unfortunately for many seniors already retired for years and burning through their capital they have only spend less option.


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## sags (May 15, 2010)

And you get a day like today...............where all of the TSX gains in 2015 are wiped out before lunch.


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## Jorob199r (Sep 4, 2014)

People believe they are "deserving" of a certain lifestyle and standard of living today.

People in earlier generations were content with food on the table and a roof over their heads. 

Today, that's not the case. People want a single family house, 2 cars per family unit, regular vacations/trips, recent electronics (iPhones,iPads, nice tvs), going out for dinner etc. Credit has allowed people to have all those things and to believe that not having them makes them "poor" and "beneath their standard of living".

It's insane.


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## My Own Advisor (Sep 24, 2012)

Insane for sure. Credit makes the world go 'round, to a point. Have we crossed that tipping point?


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## sags (May 15, 2010)

Consumer spending drives the economy and without credit the wheels of industry would have come off a long time ago.

Debt is the consequence of decades of stagnant wages and steady inflation in necessary expenses.

If the minimum wage had been pegged to inflation, it would be $21 an hour today. 

How many people receive quarterly cost of living raises ? 

When the reward for working is to live in poverty like conditions, there is no point in working anymore.


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## uptoolate (Oct 9, 2011)

OhGreatGuru said:


> The baby boomer generation is also now entering this demographic, and too many of them did not inherit their parents' attitudes about personal debt.
> 
> This is also another case of "Lies, Damn Lies, and Statistics".
> 
> ...


Good analysis. Slow news day.


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## sags (May 15, 2010)

One problem with your analysis Oh Great Guru, is that most seniors would be advised not to declare bankruptcy.

Seniors with pension and government incomes are debtor proof. The only exception is the CRA and court judgements.

Filing bankruptcy would provide them with few benefits.

They should simply change their bank account and advise their creditors their income is from pensions and they won't be paying the debt anymore.

The consequences are actually worse by declaring bankruptcy because it is registered and remains on file forever. It also costs to file with a trustee.

After 6 years of non payment, the negative debt notations would drop off their credit reports in any event.

I suspect if the number of bankruptcies among seniors is rising........the number of seniors who have simply stopped paying their debts has risen considerably more.

Consumer proposals and debt repayment plans have also lowered the number of bankruptcies.

http://www.theglobeandmail.com/glob...-chop-into-bankruptcy-numbers/article1360481/


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## uptoolate (Oct 9, 2011)

Is that a problem? Would the advice given to seniors have changed over the 2 periods?


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## lonewolf (Jun 12, 2012)

If seniors had a lot of money it would be inflationary so their money would not go as far. The less money they have the more deflationary the further their money goes. If everyone had 10 million in the bank prices would be a lot higher then they are now. Of course since we have fiat money, (money has to be borrowed to come into circulation) not everyone could have 10 million in the bank without having debt somewhere in the system.


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## james4beach (Nov 15, 2012)

That note about the population growth of the 65+ group is making me think... maybe there really is no issue here. Hmm


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## sags (May 15, 2010)

uptoolate said:


> Is that a problem? Would the advice given to seniors have changed over the 2 periods?


The laws changed but I don't know if the advice would have changed as well, although the bankruptcy period was extended from 9 months to 21 months and surplus income payments would be lengthened in a similar fashion.

The number of bankruptcies doesn't capture the whole problem, as many seniors would be technically insolvent but have no need or benefit to file for bankruptcy.

Even a small increase in bankruptcies for this segment of the population, intimates the problem is bigger than the statistics would indicate.


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## lonewolf (Jun 12, 2012)

james4beach said:


> That note about the population growth of the 65+ group is making me think... maybe there really is no issue here. Hmm


 Past peak spending years deflationary


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