Debt varies throughout different stages of life. Canadians aged 35-44 carry the highest average debt burden, reaching $541,851. This is primarily due to mortgages, as homeowners upgrade to support larger families. As retirement approaches, average debts decrease by over 75% to $127,836. Younger Canadians face significant student loan debts, transitioning to peak consumer debt during middle age. In later years, debts rapidly decrease as Canadians approach retirement.
Our breakdown analyzes the most recent Statistics Canada report to help you understand how average debt in Canada varies by age. The guide begins with a high-level overview, leading to how the types of debt change by age. Furthermore, it provides data-driven insights on strategically managing debt across different life stages. Continue reading to know how you compare and the best strategies to reduce your debt.
| Under 35 years | 35 to 44 years | 45 to 54 years | 55 to 64 years | 65 years and older | |
| Mortgage Debt | $304,631 | $466,776 | $434,090 | $216,873 | $85,051 |
| Consumer Debt | $47,173 | $67,041 | $84,720 | $79,060 | $42,025 |
| Student Debt | $17,315 | $8,034 | $6,247 | $6,468 | N/A |
Average Debt By Age In Canada
| Age Group | Average Total Debt |
| Under 35 years | $369,120 |
| 35 to 44 years | $541,851 |
| 45 to 54 years | $525,056 |
| 55 to 64 years | $302,403 |
| 65 years and older | $127,836 |
The average debt in Canada peaks between 35 and 44, at $541,851. The debt remains constant during peak earning years until experiencing rapid decreases. For those nearing retirement (55 to 64), the average total debt drops to $302,403, and it almost halves by the time they reach 65 and older, standing at $127,836.
The rapid decrease in later years is due to the amortization payback structure that lenders use to protect themselves. Initially, most of your loan payments are directed towards interest. As you make payments over time, more of each payment contributes to paying off the loan principal. You can think of it as paying the loan interest first. This is highlighted in an amortization schedule and explains the rapid debt reductions in later years.
Average Debt By Age In Canada: Under 35 Years
The average debt for young adults under 35 years stands at $369,120. A significant portion of this debt is mortgage-related. This segment is likely focused on acquiring their first home. As such, they’d find value in understanding how to get pre-approved for a mortgage.
Consumer debt in this age group is lower overall, likely because they are early in their careers and focused on paying down student debt. Vehicle loans make up about half of their consumer debt, as many finance their first car. Credit card debt is also common as younger consumers build their credit scores.
The most significant burden of student loans is shouldered by this age group, with a total of $17,315. The best advice for this segment is to focus on building creditworthiness and income stability. This will help them keep interest rates low. Likewise, they’d find value in researching the best credit cards for building credit.
Average Debt by Age In Canada: 35 To 44 years
Those aged 35-44 carry the heaviest debt burden at $541,851 on average. Mortgage loans make up the lion’s share at $466,776 as families upgrade to larger homes. At this stage of life, it’s valuable to understand how mortgage renewals work. This will help them consistently negotiate the best interest rate.
Student loans have dropped to just $8,034, indicating graduates are making headway on repayment. However, credit card balances peak at $10,144 for 35-44 year olds. Instead of paying a high interest rate on credit card debt, this segment can save funds through a balance transfer credit card. Overall, this segment will find the most value in understanding how to keep interest rates low through debt consolidation loans.
45 To 54 Year: Average Debt By Age In Canada
For the 45 to 54 age group, the average total debt is the second highest at $525,056. Mortgage debts average $434,090, including a $105,185 spike towards non-primary home mortgages. This suggests a potential shift towards diversifying real estate portfolios as individuals approach middle age. As such, this segment would find lots of value in understanding how to invest in real estate.
Consumer debt peaks in the middle age range of 45 to 54, with an average of $84,720. Given the high interest rates of this category, this segment can tap into home equity to save interest fees.
Pre-Retirement Debt Management (55 to 64 years)
As individuals near retirement, their average total debt decreases to $302,403, with mortgage debt amounting to $216,873. During this stage, debt management strategies often focus on paying down debts, utilizing methods such as refinancing or lump-sum payments to alleviate the financial burden in retirement.
For those aged 55 to 64, there is a noticeable decline in principal residence debt, which stands at $171,052, and other real estate debt, which amounts to $45,822. This decline could indicate mortgages being paid off or downsized as individuals prepare for retirement.
Interestingly, the figure for student debt slightly increases to $6,468 in this age group. This may be due to parents taking on loans for their children’s education or individuals pursuing further education later in life.
Debt Management In Retirement (65 years and older)
Even in retirement, individuals aged 65 and older still face debt obligations, with an average total debt of $127,836. Most of this debt is attributed to mortgages, averaging $85,051. Many retirees continue making mortgage payments to pay off their homes, while some utilize strategies like reverse mortgages to access home equity without selling their residences.
Consumer debt, including credit card and personal debt, drops significantly for seniors as mortgages and car loans are paid off. With lower income, the accumulation of new debt is limited. Retirees prioritize reducing expenses and focusing on paying off any remaining debts.
Average Mortgage Debt by Age
Younger individuals primarily invest in their principal residences. Some diversify into other real estate investments as they age, particularly in the 45 to 54 age bracket. Finally, as individuals approach retirement, there’s a significant reduction in all types of mortgage debt.
| Mortgage Type | Under 35 years | 35 to 44 years | 45 to 54 years | 55 to 64 years | 65 years and older |
| Mortgage on principal residence | $256,916 | $394,040 | $328,904 | $171,052 | $62,527 |
| Mortgage on other real estate | $47,715 | $72,736 | $105,185 | $45,822 | $22,524 |
| Total | $304,631 | $466,776 | $434,089 | $216,874 | $85,05 |
Average Consumer Debt by Age
Consumer debt peaks in the middle-aged groups, particularly between ages 45 and 54, before declining as individuals approach retirement. This could be due to income stability, financial awareness, or the imperative to reduce debt before retirement. Different types of consumer debt also show distinct patterns, offering a nuanced understanding of financial behaviour across life stages.
| Consumer Debt Type | Under 35 years | 35 to 44 years | 45 to 54 years | 55 to 64 years | 65 years and older |
| Line of credit | $13,101 | $24,860 | $36,659 | $40,308 | $25,735 |
| Credit card and installment debt | $6,512 | $10,144 | $9,754 | $8,993 | $4,787 |
| Vehicle loans | $23,405 | $27,440 | $29,176 | $22,609 | $9,540 |
| Other debt | $4,155 | $4,597 | 9,131 | $7,150 | $1,963 |
| Total | $47,173 | $67,041 | $84,720 | $79,060 | $42,025 |
Average Student Loan Debt by Age
Overall, the trend shows a general decrease in student loan debt as individuals age, with a slight uptick in the 55 to 64 age group. This pattern provides valuable insights into the financial life cycle of student loans, emphasizing the long-term commitment required to manage this type of debt.
| Student Debt | Under 35 years | 35 to 44 years | 45 to 54 years | 55 to 64 years | 65 years and older |
| Student loans | $17,315 | $8,034 | $6,247 | $6,468 | N/A |
Evaluating Good vs. Bad Debt
Not all debt is created equal. Certain debts can be considered “good” if they boost your net worth or earning potential. Others are “bad” and do not offer long-term value. This section provides some examples and a brief overview of each option.
| Good Debt | Bad Debt |
| Mortgages | Credit Cards |
| Student Loans | Payday Loans |
| Business Loans | Car Loans |
Good Debt
Debt used to invest in assets that appreciate in value over time, like a house or education. This debt allows you to build equity and increase earning potential. Mortgages, student loans, and business loans to grow a company can be considered good debt. The borrowed money generates value beyond the cost of repaying the debt. If managed properly, good debt improves net worth over time.
Bad Debt
Bad debt is used for purchasing depreciating assets such as cars, vacations, and consumer goods that lose value over time. Credit card debt, payday loans, and personal loans used for discretionary spending often fall into bad debt. This type of debt does not generate income and can reduce your net worth.
How To Reduce Your Debt In Five Steps
- Create a Budget: Analyze your income and expenses to create a realistic budget. This will help you identify areas where you can cut back and allocate more funds towards debt repayment.
- Prioritize and Consolidate Debt: Evaluate your debts and prioritize them based on interest rates and outstanding balances. Consider consolidating high-interest debts into a single loan or credit card with a lower interest rate.
- Financial Management: Explore ways to increase your income, such as taking on a part-time job, freelancing, or starting a side business. The extra income can be used to accelerate debt repayment. Likewise, identify unnecessary expenses and find ways to reduce or eliminate them. This could include cutting back on dining out, entertainment, or subscription services.
- Negotiate with Creditors: Reach out to your creditors to negotiate lower interest rates or more favourable repayment terms. They may be willing to work with you to create a more manageable repayment plan.
- Seek Professional Help: If you’re struggling to manage your debt independently, consider seeking assistance from a credit counselling agency or a debt consolidation service. They can provide guidance and help you develop a personalized debt repayment plan.
The Bottom Line
Managing debt is a crucial part of personal finance across all life stages. While debt is often necessary for significant purchases like real estate, being above national averages can signal the need for a debt assessment and repayment plan. The strategies outlined equip Canadians of any age to take control of their debt situation. Small steps like budgeting, reviewing interest rates, and restraining spending can lighten debt burdens over time.
