Total Consumer Debt per Capita
Province
2007
2012
5-Year
Change
2007-12
Canada
$27,545
$45,694
+65.9%
British Columbia
$39,043
$54,793
+56.4%
Alberta
$29,660
$49,769
+67.8%
Ontario
$28,018
$45,166
+61.2%
Source: Statistics Canada
Generally, young workers who have grown up in this new financial
environment take a different view of credit than previous generations.
Those wishing to purchase a home, for example, may hold the perception
that debt is an unavoidable part of life. Some may have under-developed financial literacy, and as such, may have trouble living within
their means and/or saving for the future. This financial illiteracy can
result in unchecked debt.
As discussed earlier, debt is also having a profound effect on older
workers. This creates a ripple effect for younger workers, as the cost of
living and unpaid debt are principal reasons why many older workers
are choosing to stay in the labour force past the retirement age of 65.
Statistics Canada data shows that in 2008, one in three retired individuals aged 55 and over held a mortgage or was a consumer in debt.19
More recently, a CIBC retirement poll conducted in 2012 revealed that
approximately 31% of Canadians aged 55-64 do not feel financially
prepared for retirement.20 Given the need to pay down debt and
support longer retirements than any previous generation, many of
today’s older workers have good reason to stay in the labour force
longer.
Can young workers count on inheritances?
As in previous generations, many young adults are counting on a future
windfall in the form of an inheritance. However, young workers today
may find themselves disappointed, as substantial intergenerational
transfers are becoming remote possibilities for many families. Older
workers are staying in the labour force longer, but also have less savings
to pass on to their children.
19
Katherine Marshall, Retiring with Debt, April 27, 2011 (Statistics
Canada Cat. No. 75-001-X).
20
CIBC, corporate news release: Nearly half of Canadians say they
are not financially prepared for their retirement, January 19, 2012.
(http://micro.newswire.ca/release.
cgi?rkey=2001195124&view=14730-0&Start=&htm=0)
21
Head Solutions Group, Generation Z and Money Survey (on behalf
of investment advisers TD Ameritrade), September 2012.
22
Investors Group, media release: Trillion