Canadians age 65 and over have the nation's worst insolvency and bankruptcy rates, according to a Vanier Institute study entitled, "The Current State of Canadian Family Finances."

Senior insolvencies have spiked by 1,747 per cent over the past 20 years. Older Canadians were 17 times likelier to fail at meeting their financial responsibilities during 2010 than in 1990.

The magnitude of money problems among seniors is staggering. As highlighted in the study's foreword, 2012 marks the first year in which Canada's vast baby-boomer generation turns age 65. Non-profit organization CARP, known for its "New Vision of Aging for Canada" motto, projects that one-quarter of the Canadian population will surpass age 65 by 2031.

Below are 8 practical steps that seniors can use to defend against intensifying financial pressures.

1. Reduce personal debt.
The Vanier Institute's most startling finding is an explosive growth in borrowing, fuelled in part by lower interest rates. At the end of the third quarter of 2011, Canada's household debt-to-income ratio hit 153 per cent. Canadian households now carry an average $103,000 in mortgage and consumer debt, another all-time record.

"Avoid the outcome of all these people who are carrying a lot of debt into retirement," says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada.

2. Boost savings.
The average Canadian household tucked away $2,692 during 2010, down from $8,041 in 1990. Accelerating debt is a major factor behind the 66.5 per cent drop in savings, forcing some consumers to redirect their earnings towards paying down what they owe.

While some experts recommend saving from 10 to 20 per cent of income, the best strategy is to set aside as much as possible. Most financial institutions and many advisers provide online calculators that determine a ballpark figure for retirement saving goals.

3. Control spending.
Another reason for shrinking savings is that Canadian households spent an average $64,676 annually as of September 2011. That figure represents a 21.6 per cent gain from $53,208 in 1990.

Older Canadians pay more for medical care and prescription drugs, so regular exercise and healthy eating habits can help. The Vanier Institute study also reveals that inflation for seniors is somewhat higher than increases in the overall Consumer Price Index, and has the most drastic effect on poorer households.

4. Improve financial literacy.
Most seniors didn't learn about personal finance in school or at home. "My father handled the finances and paid the bills," says Schwartz. "Truthfully, we didn't really talk about money."

As a result, many older Canadians have significant gaps in money management knowledge. Although retirement planning should start as early as possible, people can learn financial literacy skills at any age. Starting on the path to improved money management can be as simple as visiting your local bank manager or contacting an independent financial planner.

5. Set realistic goals.

Seniors have been bombarded with retirement-theme commercials implying endless parties and rounds of golf. While it's understandable why some Canadians overlook medical expenses and other realities that surface as they grow older, seniors need to be extra conservative when budgeting for retirement -- especially if they carry mortgage debt.

The Canadian Association of Accredited Mortgage Professionals estimates that 1.9 million Canadians would be concerned if their monthly mortgage payments rose by just $300.

6. Plan for a longer life expectancy.
The Vanier Institute study also highlights the fact that Canadians are living longer. Life expectancy data from Statistics Canada has the average Canadian man now living until age 79, up from age 63 in 1942. The typical life expectancy for a woman extended from age 66 to age 83.

A prolonged lifespan increases the probability that seniors will outlive their cash, even if older homeowners turn to riskier financial products like reverse mortgages.

7. Prepare for the unexpected.
Some Canadians go bankrupt because they are financial irresponsible. Others are relatively careful, yet find themselves in desperate financial straits due to unforeseen events such as a major illness or disability.

Seniors should consider buying insurance for critical illness, long-term care and other supplemental health benefits. This is important since most employer health insurance plans end at retirement.

8. Diversify income sources.
Researching post-retirement income is another good idea. Service Canada is a federal agency that offers an online Canadian Retirement Income Calculator to help determine government-provided amounts.

Because most retirement income is fixed, seniors should investigate other revenue streams such as renting out part of their home, high-interest savings accounts and blue-chip dividend stocks.

For seniors, the best news from the Vanier Institute study is an increase in job opportunities. Employment for Canadians age 55 and over has soared by 350,000 full and part-time positions, accounting for half of the job gains since the low point of the recession in July 2009.

By using the above steps to reduce debt, build savings and insulate against financial stress, Canadians will be able to choose projects about which they are truly passionate -- rather than being forced to continue working.

See related: Simple strategies for preventing senior bankruptcies; How much retirement income do Canadians really need?