The value of assets of Canadian seniors has increased, but so has the proportion of their debt, according to a new report.
The report, called Debt and assets among senior Canadian families, pegs the proportion of debt at 42 per cent in 2016 from 27 per cent in 1999.
The median net worth of senior families with debt increased to $537,400 in 2016 from $298,900 in 1999.
The significant increases in debt and assets of seniors were largely attributable to the strong housing market in recent years. From January 2005 to December 2016, housing prices rose by 109.8% in nominal terms. These changes affected the financial balance sheet of many Canadian families.
Mortgage loans and consumer debt both rise
Among senior families with debt, about two-thirds of the overall increase in average debt levels was attributable to mortgage debt, while the remainder was due to an increase in consumer debt, such as outstanding balances on credit cards, lines of credit, vehicle loans and unpaid bills.
On the plus side, the value of employer pension plans contributed 12%, while 36% was due to increases in other types of assets, such as financial investments.
Having more consumer debt than income can place families in a vulnerable financial position. In 2016, 14% of senior families had consumer debt that was higher than their after-tax family income, up from 4% in 1999. For these families, meeting financial obligations could be a challenge as a large portion of their income would go towards servicing debt that is not backed by an asset.