Personal Debts Interfere with Canadians’ Retirement Plans

Recently-released data indicates that the average Canadian’s debt load has increased dramatically of late. According to Moody’s, the credit rating firm, debt balances have grown by an annualized rate of nearly 6 percent over the past two years. This trend jeopardizes the retirement plans of countless middle-class Canadians and threatens to weaken the country’s economy even further.

In the past, robust wage growth tended to offset the negative effects of debt. In other words, most indebted Canadians could count on receiving regular pay increases that enabled them to stay current on their credit card, mortgage and personal loan payments.

The new fiscal reality has fundamentally altered this arrangement. While the country’s economic boom continues in places like oil-rich northern Alberta and the financial hub of metropolitan Toronto, many other parts of the country seem to suffer from a permanent malaise. In these places, wage growth may be stagnant or even negative relative to inflation.

With increasingly bleak prospects, young Canadians who get into debt at an early age often have trouble keeping up with their mounting balances. This is especially true for university students and graduates for whom higher education would not be possible without leverage. Many of these folks expect the added earning power of their degrees to offset their hefty student debt loads.

Unfortunately, Canadian student debt is growing at an alarming rate. According to the Canadian Federation of Students, the average student graduates with about $27,000 in debt. While that’s a bit lower than the U.S. average, the cost of Canadian higher education continues to rise at a fearsome rate.

To ensure that they remain current on their obligations, underemployed recent graduates may need to put uncomfortable amounts of their take-home pay towards paying down their student loan balances. This may mean that they have little disposable income left over for basic necessities like food, fuel and clothing.

In many cases, young Canadians must pay for these essential items with high-interest credit cards. While financial experts often frame debt management in terms of personal responsibility and impulse control, it’s more often the case that struggling borrowers’ debt problems are created by fiscal necessity.

The outlook for borrowers trapped by stagnant incomes, mounting credit card balances and rising interest rates often appears to be bleak. Most Canadian financial experts recommend that their clients save enough money over the course of their careers to generate an annual stipend equivalent to 70 percent of their pre-retirement income.

For someone who earned an average of $50,000 per year, an acceptable replacement income would be $35,000. To fund a 20-year retirement, this would require savings of $700,000.

For folks dealing with serious debt problems, it is impossible to sock away such large amounts of money. As such, borrowers who wish to retire comfortably must first seek help to retire their debts.

Among the many available debt relief options, debt settlement often offers the clearest, lowest-cost path to debt-free living. Maple Leaf Debt Helpers, one of Canada’s premier debt relief firms, specializes in debt settlement.

Its professional staff negotiates directly with credit card companies and other lenders to reduce the principal balances on its clients’ outstanding debts. Thanks to their efforts, the firm’s customers may find themselves free of their debts in as few as 12 months.

They may also save thousands of dollars in the process. Every case is different, but past debt settlement clients have seen their total debt burdens reduced by as much as 60 percent.

To learn more about its exciting debt relief process, call Maple Leaf Debt Helpers today or fill out their online quote request form.


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