Canada's Baby-Boom-Bust

We thought the baby-boom generation would have it all. Prosperity, education, good jobs, plentiful recreation, functioning families, excellent housing, national health care, satisfied lives. Lives of plenty, for food is plentiful available and inexpensive in Canada and always has been in comparison to other countries of the world.

Great new employment opportunities opened up for Canadians after the last of the two Great Wars. Canadians, celebrating the end of world hostilities and the future that was Canada's, had a notable cohort of babies, the boomer generation.

They were exposed to advantages their parents never had, from eating wholesomely to a myriad of recreational opportunities, and advanced education at the post-secondary level. Universal health care removed the anxiety of costly medical procedures and ongoing health problems. The world was their oyster. So what happened?

We now learn that among baby-boomers, those over 45 years of age represent the highest-debt-burden portion of the population. What's more these are the modest-income earners, those whose hopes didn't match reality, who had low-income jobs and lived relatively modestly compared to their peers with well-compensated employment and assured, employer-sponsored defined-benefit pension plans.

Cheap lending rates, low rates of interest encouraged a whole lot of people of modest means to extend their way of life, their ownership of desirable objects, to travel and to plan for even more advantages to be paid for at some time in the future. And that future is fast approaching. Even as people near retirement age they are hampered by a high rate of debt.

There's an astounding number of Canadians in their 50s and onward who are less fortunate than we were led to believe by the sunny prognostications of a future Canada. People who are now unemployed and who when they were employed lived on every cent of their earnings. Where once, in the distant past, people struggled to put away something in a bank account for the future, many did not.

No savings, and a growing debt-load from borrowing at low interest rates. Paying on credit cards which have a high interest rate. Under-employed, those who are gainfully employed but vulnerable to job-loss. For many bankruptcy always seems like an escape from looming crisis. but after that, what exactly?

Most people haven't invested in RRSPs, and they haven't any secure bank accounts where a little bit was incrementally stuffed away for those so-called rainy days - or the elderly future. Of the population preparing for retirement, 58% are not financially stable; 68% without a financial plan to become financially viable in retirement.

One study released by a Rogers Group Financial study found that 40% of people three to seven years from retirement were in debt and would be in debt in retirement.

"It's a worrisome trend. I don't think the average Canadian understands. Interest rates will not stay low forever and you can't continue to finance a higher standard of living by increasing your debt. It will catch up to you", explained Vancouver adviser Clay Gillespie.

For those people with heavy debt loads, it's obvious that one solution would be to keep working, forget about wanting to retire at 60, 65 years of age. And think about Stephen Harper's musing about a new initiative his government is prepared to take on Old Age Security - deferred until age 67.

Canada hasn't the highest debt-to-income ratio by any means. Denmark comes first, then the Netherlands, Ireland, Norway, Switzerland, Australia, Sweden, and then comes Canada. With the U.S., U.K., Portugal, Spain, Finland, Austria, Germany, France and Italy after us.

Amazing, isn't it, that three of the four PIGS countries in economic decline are in that picture; one above, two below.