We are drowning in Debt. Which generation carries the most?

The short answer, 40-49y.o. carry the most debt.

But in a close second, is the 30-39y.o. bracket. According to a recent Globe and Mail article (may I add, it was one of the most comprehensive articles I’ve read in quite some time), the average (important to note that the following figures are based on averages) Canadian owes $1.83 for every $1 in after-tax income. Yup, that’s more than the United States, Britain, Germany, France, and Japan. Not something we as a country should be proud of.

The next few paragraphs and figures are really going to tease apart this issue and compare various types of debt amongst different age cohorts and how debt can affect your retirement.

Mortgage Debt

This is literally the elephant in the room! Most Canadians consider their home as the largest investment so it should not come as a surprise that their mortgage ranks number one on their debt ladder. However, not everyone is a homeowner and furthermore, not everyone carries a mortgage to the grave. Some will aim to eliminate it immediately, while others have their death loan well into their later years.

You’ll clearly see that the two largest cohorts that possess a mortgage are 30-39/4049 year-olds and they respectively have the highest balance owing (between 450-500K CAD). The trend as you can imagine is to pay off your mortgage as you grow older and that is visible as well in the graphic.

“Just 22 per cent of people in their 60s reported carrying a mortgage, and 11 per cent of people in their 70s. But those who do have mortgages carry quite the load. The average balance owing for seventysomethings with a mortgage was reported at $217,543.” 1

Who carries the largest overall debt load (mortage, HELOC, student and vehicle loans and credit card debt?

When you tally up all the conventional loans and bundle them into an age bracket, boom, the 40-49-year-old bracket comes up on top. Once again, not a ranking a person should be please about. No surprise that the 30-39year old bracket is a close runner up as the middle twenty years of your life tends to have the most change (career change, marriage, children, home purchase etc)”1

So I’ll be debt free in retirement?

According to the research by the Globe and Mail, nope. You will likely have some sort of debt. Those people over the age of 70 (safe to say most of them are retired, at least by conventional standards), tend to have the least amount owing on their mortgage compared to the decade younger than them BUT they have a very similar percentage of credit card debt (likely because of all that shopping they’re doing for their grandkids ;))

The dirty truth about Credit Card debt.

Credit card rates stand out for being expensive. Low-rate cards charge 11.99 to 13.99% a year, while conventional cards usually charge 19.99 -20.99%

We’ve already seen that a minority of people carry card debt. But the average card balance reported by those who do have one is $6,343, which is high compared with other estimates of card balances.

What kind of burden is created by this level of debt and high card interest rates? A federal government credit card interest calculator shows that someone making the minimum payment every month of $6,343 would take more than 22 years to repay this amount, with a total interest cost of $7,661. Pay $250 a month and you get the card bill paid off in close to three years, with interest totaling $1,970. 1

US. Average revolving credit card balance: $6,501

A revolving credit card balance is one that persists between payments -- in other words, it's what people pay interest on. It's one of the most important figures when looking at credit card debt.

The average credit card balance is $6,501 as of the third quarter of 2023, per Experian. That's up from $5,910 in 2022.

Based on data from the second quarter in 2023, Gen X carries the highest average credit card balance, $8,870, while Gen Z carries the lowest average credit card balance, with $3,148.

Average new car payment: $735/ Used Car: $523

Auto loan debt has been creeping up over the past several years and hit $1.626 trillion in the second quarter of 2024.

The average auto loan debt is $24,035 as of the first quarter of 2024.

The average car payment for both new and used vehicles has stabilized over the course of the year, with little change in recent quarters, according to data from Experian.

Now that you’re likely sufficiently worried and scared about the current state of debt across Canadian households, you can learn about a few strategies that have been proven to help eliminate and consolidate that debt.

If you're interested in learning more about getting your financial house in order and how to set up your financial life, please register for the recorded beginner course.