Population aging is already changing our lifestyles.  In the U.S. driving is down 8.9% from its peak in 2004.  As noted by the University of Michigan Transportation Institute[1], this drop in mileage began before the recession and therefore cannot be attributed only to financial pressures.  Older people drive less for many reasons including their retirement from the daily commute, their kids no longer requiring a “parent-taxi” or wishing to borrow the family car.  The increasing adoption of technologies by older adults also reduces the need to drive.  Canadians may be similar to Americans in their driving habits but there are some unique pressures for those living north of the border.

Insurance premiums keep increasing:

A 57 year old Ontario woman was surprised to receive notification of her car insurance price increases, although no claims history or other triggers for an increase had occurred[2].  Already retired, her husband is also planning to retire soon.  Consequently these increases mean:

“…she can’t afford the monthly increase.  It makes a dramatic impact”.

Unfortunately her story is likely to be replayed in many parts of the country.  According to a tweet by 680News on July 30:

“TD Bank warns of 3rd quarter loss for insurance division due to severe-weather related claims in Alberta and GTA.” 

Rising insurance premiums are likely to follow.

Price sensitivity and time availability of retirees

Retirement means an increase in cost consciousness.  Spending the retirement nest egg is difficult for most of us, even if we are receiving a pension income.  This time of life often results in a readjustment in spending priorities.  Options such as public transportation, rental cars, car sharing clubs and even cycling become appealing.  Without demanding work schedules our transportation can be a more flexible part of our lifestyles.  Even retirees with their jammed calendars find they enjoy both the journey and the destination.  Car-pooling becomes a feasible option.  Whereas those still working, especially if they are taxiing kids around, are interested primarily in the destination.

Personal debt levels keep increasing

Negative reactions to insurance premium increases may be happening around the country.  Considering the record high debt loads of Canadians (with a debt to income ratio well beyond 160%) there is little room for added expenses.  The car loan is becoming an acute stressor on the household balance sheet.  Canadians are now able to finance a car for a maximum term of 8 years (96 months).  According to JD Power and Associates, many Canadians are taking advantage of this longer financing term:

“…today 58% of Canadian vehicle purchasers borrow with payment terms extending 72 months or more, compared to just 14% in 2007.”

Increasingly Canadian car ‘owners’ find themselves in a negative equity position.  Cars are traded for newer models, with trade-ins that are often worth less than their outstanding loan amount.  This is unsustainable[3] with the potential for financially burdened households to abandon car ownership altogether in order to get their personal balance sheets back into shape.

Going carless is only the tip of the iceberg

Motivations to reduce expenses will mean a change in other lifestyle areas including housing.  No longer tied down to their work location retirees can choose a community that offers affordable housing, suitable amenities and public transportation.  Technologies make it possible to remain in touch with family and friends regardless of distance.  Even health care is increasingly provided remotely at home[4].  Undoubtedly these financial pressures from private car ownership will drive a change in many areas of our retirement lifestyles – pun intended.