Seniors, Retirees and Credit Card Debt
Seniors are taking on an increasing amount of debt…
Senior retirees are taking on debt faster than any other demographic group– catching up quickly to those of younger people. From 1992 to 2004, credit card debt doubled for households of people 65 years and older, growing faster than the rate of the overall population. The average balance for people 75 and older went up 160 percent to $20,234.
A 2004 study by Demos, a New York-based think tank, found that consumers approaching retirement age are spending an average of one-third of their income on debt. Thirty percent of retiress describe their debt as a problem. That’s partly because some had children later in life and are paying for college into their late 50s and early 60s. Others have become caretakers for frail parents, while others have simply spent too much during retirement.
Much of that credit card spending went toward health care. Seniors in and approaching retirement age– such as the 79 million baby boomers– are carrying “debt loads that their parents would not have considered,” says Sally Hurme of AARP, the advocacy group for people 50 and older. “This does not bode well for financial health.” Using credit cards to make ends meet in retirement has resulted in an increase in senior bankruptcy claims, as well.
Part-time work or taking out a reverse mortgage may be helpful toward working out your debt problems. If you’re struggling with debt but believe you can work it our yourself, begin by making direct contact with your creditors who want to help and often will reduce your payments. If you’d rather work with a credit-counseling agency, choose one that is licensed in your state and is a member of the Better Business Bureau. More tips on dealing with large debts can be found at the FTC’s Web site, www.ftc.gov/credit, or 1-877-FTC-HELP.
