Judy Southon never imagined it would come to this. She and her husband Vic had good jobs, raised a son and were homeowners. But after a run of bad luck, the 67-year-old wound up deep in debt and had to declare bankruptcy.
"I was scared and shocked," says Southon, who lives in Toronto.
The golden years have become a tarnished chapter for some. Seniors are carrying more debt into retirement and, as a result, a growing number are going bankrupt.
According to the federal Office of the Superintendent of Bankruptcy, 10 per cent of those who declared bankruptcy in 2014 were aged 65 and older. That's a whopping 20.5 per cent increase from 2010.
Spend savings, pile on debt
One of the reasons is actually a plus — we're living longer. "For many of us, we're outliving our savings," explains Nora Spinks with the Vanier Institute of the Family, a non-profit research organization.
Another driving force is that more seniors are retiring in the red. According to Statistics Canada's most recent numbers, in 2012, 42.5 per cent of people aged 65 and over still had debt. That's a stunning increase of 55 per cent since 1999.
Bankruptcy trustee Doug Hoyes blames the lingering debt largely on our addiction to low interest loans.
"If you've got decent credit, you can go out and get a mortgage for 2.5 per cent. So why not be buying the bigger house?" he says. "Today we don't need to save because we all have a line of credit."
But paying down debt in your senior years can be challenging on a fixed income. Throw in an unplanned setback like a financially needy adult child or a family illness and the bills can become crushing.
Southon's setback began when her husband's communications business failed in 2002. To keep paying the bills, they had to sell their condo. Then, the unthinkable: Vic was diagnosed with dementia and could no longer work.
"I became very frightened, quite frankly, because I realized he wasn't going to be generating any more income and everything was up to me," says Southon.
She had given up her teaching career to go into business with Vic. While caring for her ill husband, she still managed to hold down a job at a bank until she was laid off in 2008.
"The stress of the financial burden plus the stress of caregiving was huge," she says.
Vic's dementia worsened to the point where she had to move him into a nursing home. That meant paying his housing costs plus her rent. "We had two homes to pay for plus at this point I wasn't making enough to make ends meet," says Southon, She was landing only short-term, low-paying jobs.
Vic died in 2011 but the bills kept mounting to the point where Southon couldn't keep up. "The 'b' word was floating around in my mind for about a year," she says before she bit the bullet and, at age 66, filed for personal bankruptcy.
The financial burden of ill health
A new research study examining older Canadians and finances found that unexpected major events such as big health expenses challenged many seniors' financial plans.
The Ontario Securities Commission report surveyed more than 1,500 Canadians over 50.
For those under 75, the most common event derailing financial plans was an unplanned early retirement, often due to ill health.
Wayne Kilgallen worked most of his life as a farmer in Saskatchewan. But he had to quit five years ago after suffering a severe heart attack. Now, at age 64, he lives on disability in Toronto, where he has family.
To cover costs for simple things like clothing and food for himself and his dog, he says he's had to resort to credit cards, racking up $15,000 in debt.
"Usually I run out of dog food and I worry more about my dog than I do myself," says Kilgallen, adding that he can't give up his pet because she's "family."
Kilgallen's debt payments now cost him about half his $872 monthly living allowance.
"I try to make it but it's hard," he says. "I got this debt, I got that debt, I can't really do anything."
A better plan
Spinks, with the Vanier Institute, says the best way to guard against falling into financial traps in later years is to develop a long-term plan.
"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.
Although she fell into difficulty, Southon says she now has her finances in order and has mapped out a promising path for the future.
She's working two part-time jobs and has just become a licensed spiritual practitioner. She hopes to set up a practice and use her life experiences to help others.
"I look back on it as a learning experience," says Southon. "It is a way of starting over again. Never will this happen again."
Also on HuffPost:
Ecuador is the best country in the world to retire to, according to International Living’s Annual Global Retirement Index 2015. The country gets top scores (100) in the Buying and Renting and Climate categories and scores high across the board in all other categories. Expats are drawn by the low cost of living, perfect climate, the beautiful and diverse landscapes and the favorable retiree benefits.
Coming in second place in International Living’s Retirement Index this year is Panama. When it comes to the “Benefits and Discounts for Retirees” category of the Index, Panama has always ranked at the top with a perfect score of 100. Simply put, no other country in the Index does more for retirees, both local and foreign, offering a host of discounts with its pensionado program.
Mexico is the third best country in the world to retire to. Due to its proximity to the U.S., the comforts of home are never far away in Mexico. Established expat havens in communities such as Puerto Vallarta and San Miguel de Allende ease the integration process, while excellent property can still be found for far less than you’d pay in the States.
Every year, more and more expats are waking up to the amazing opportunities Malaysia has to offer. The country has one of the most robust economies in Asia, and this is reflected in the consistently high standard of living available to locals and expats alike. It’s just one of many factors that led to it being ranked the highest Asian nation in this year’s index.
Coming in fifth position in this year’s Retirement Index, Costa Rica scores high points across the board, especially in the Integration and Entertainment and Amenities categories. Costa Rica is a hugely popular retirement haven for the climate, neighborly atmosphere, low cost of living, excellent health care, stable democracy, and countless ways to have fun.
The small island of Malta enjoys plentiful sunshine year-round, on top of world-class health care (consistently ranked among the top five in the world by the World Health Organization) and tasty Mediterranean cuisine. The island also has one of the lowest crime rates to be found anywhere. All this contributes to make it the sixth best place in the world to retire.
For those seeking sun and affordable living in Europe, Spain remains by far the best option available, evidenced by its standing as one of the highest ranked European nations in the Index (tied with Malta). Although not as cheap as in most of Latin America, property in Spain is often of a high standard and far better value than in many other European countries. Likewise, Spain’s cost of living is lower than what you find in much of Europe.
For North Americans heading south, Colombia is becoming an increasingly popular choice. Given all that this diverse country has to offer, it’s not difficult to see why. Second only to Ecuador among South American nations this year, Colombia has an incredibly low cost of living; according to International Living Colombia Correspondent Michael Evans, a couple can live comfortably on just over $1,200 a month.
Portugal’s mild climate, its low cost of living, and its largely First-World infrastructure make it an increasingly popular European option. English is widely understood, especially in the large cities, and—combined with the warm Portuguese hospitality—makes it easy to settle in and feel at home, whether you prefer sophisticated urban environments like Lisbon or one of Portugal’s many beach communities.
As Asia’s appeal to North American expats continues to grow, Thailand has become a popular destination. The country combines the best of authentic Asian cuisine and culture with enough North American influences to help you feel at home. Thriving expat communities already exist in the larger cities, such as Bangkok and Chiang Mai, and resort areas, such as Phuket and Hua Hin.