Alberta Bankruptcy and Retirement The Cause and Effect

Posted by: Sandy Lyons on 12/23/2011

In a kinder, gentler world, you would never see the words Alberta bankruptcy and retirement in the same sentence.  However, the sad fact is that both here in Canada and in the United States, more and more seniors enter their retirement and in a few scant years find themselves facing bankruptcy.

There are the fortunate few who by virtue of higher income, better planning, and privately funded pensions, enter retirement with income sufficient to maintain their pre-retirement life styles.  However, even these seniors face a dramatically new and different threat to their retirement – the need to provide financial support to adult children in deep financial difficulty in Alberta.

Times are tough and more and more Canadians are facing declining or stagnating income.  Credit cards that have been subject to financial abuse in the best of times have become sources of income for many in the worst of times. 

Some seniors find themselves running up balances on their own cards to help their children, or loaning money so the children can keep up with monthly bills.  Other seniors who had counted on the proceeds from the sale of a no longer needed larger home find themselves delaying the sale and even taking on a new or second mortgage to allow their children to move back home with them.

Other seniors resort to credit cards to maintain their pre-retirement standard of living in the face of reduced income in retirement.  In short, in both cases, mounting credit card debt is the major force driving seniors into bankruptcy during retirement.

If you are approaching your retirement years, reviewing your debt load is something you should do, regardless of the size of your pension or your retirement “nest egg.”

If you have never worked with a personal budget to control expenses, why not start now while you have more income at your disposal?  In the pre-credit card era, when you wanted to make a major purchase, other than a home or an automobile, you had to save for it before buying.  This made personal budgets a part of the lives of a majority of Canadians.

That has not been the case for decades, as credit cards allow us to buy now and pay later.  This system works fine until the buying reaches the point the paying takes literally years to accomplish.  Credit counselors will tell you credit cards should be reserved for emergencies and large purchases followed by short term repayment.

What many Canadians now do is pile one major purchase on top of another and then throw living expenses like food, clothing, and entertainment into the mix. 

If you want to protect your upcoming retirement from the threat of a future Alberta bankruptcy, the time to start reducing your debt is right now.