A response to blog post May 17 (“Vermeer’s Case for Financial Literacy”) from one of my colleagues Marie Howes, Certified Financial Planner. The item mentioned was the recently released report by Statistics Canada’s about Canadians retiring in debt.
Opining on my phrase “the Vermeer effect” based on the notion of dying in debt as opposed to retiring in debt, here are Marie’s thoughts – “Vermeer should have been so lucky as to have lived in present-day Canada! This report intrigued me, so I went to the actual report for more details.
Of the estimated 5 million retirees, 33.33% had some debt; but 66.66% were debt-free. Of those with debts, 25% of that group had debts less than $5,000; 55% had debts less than $25,000; 40% had debts more than $25,000; and just 5% had debt greater than $100,000.
From a financial planner’s perspective, it may be that those with less than $5,000 were simply reporting an as-yet unpaid monthly credit card debt; those with more than $100,000 in debt could be those who had renovated their homes to achieve their dreams or were paying off debts accumulated because they were supporting children or parents and had no chance to save for retirement!
We should focus not on retiree debt levels, but on how we are going to finance housing and care programs for retirees going forward. Current and early Boomer retirees have ample income and tax advantages; focus more on the fiscal squeeze facing young families.”