There has been an unsettling trend presenting itself, which is becoming more pronounced year after year – Rising debt in seniors. As cuts and pullbacks threaten the very programs on which they heavily rely, and their nest eggs suffer irrecoverable damage as a result of the recession and low interest rates, many seniors are struggling to stay above water.
The Numbers Don’t Lie
- According to a Census report released last Thursday, the median level of debt among households led by someone 65 or older rose nearly 120% between 2000 and 2011. The main cause, rising mortgage debt.
- The survey also revealed people 55 and over accounted for almost 27% of bankruptcy filings in 2011
- In a recent survey of low and middle income households carrying credit card balances, research and advocacy group demos concluded that people age 65 and up have more credit card debt than any other age group. The Economic Benefits Research Institute also found the median credit card debt of a typical 75 year old increased 110% during a recent three year stretch.
- Surveys also reveal that over the past two years, there has been a 27% spike in the number of retirees requesting help from the Association of Independent Consumer Credit Counseling Agency.
- According to the AARP, at least half of all seniors pay for medical expenses with credit cards, and more than 20% use their retirement accounts to cover the credit card bills.
- According to a survey released by Fidelity Investments, nearly half of boomers expect to retire with debt.
The Causes are Widespread
- The increase in home ownership by seniors, and spike in the use of home equity loans accounts for some of the debt.
- The Global Financial Crisis, which wiped out an estimated $16 trillion had a profound effect on the retirement nest egg of many seniors and boomers.
- Providing financial support to multiple tiers of the family tree is causing huge financial strain on boomers and seniors.
- About 52% of individuals over age 45 who have children are providing them with financial support, some even taking them back in the home due to foreclosure or job loss.
- 35% are providing financial support to grandchildren, according to a Merrill Lynch report.
- About 16% are providing financial support to parents or in laws, and many have taken on the responsibility of being the primary care giver to their parents.
- About 10% are providing financial support to siblings
- Downsize Your Debt Before You Retire
- National Council on Aging offers Benefits Check up, which is a free and confidential service that helps seniors and their caregivers find financial support for food, housing, health care, in home services, medications, and more.
- Medicare offers information on getting help paying costs
- IRS offers free tax preparation by volunteers
- For help with paying heating/cooling bills, telephone bills, and assistance buying nutritious food, click here.
- Red Flags Seniors Should Look For and Ways to Protect Yourself Financially
It is so disheartening to see those who have worked their whole lives and given so much, struggle to just “get by” in their daily living needs. There are tons of additional resources available to seniors and boomers on the web as well. If you want to speak with someone directly regarding financial help, there are many reputable registered investment advisors capable of assisting you or your loved ones, us being one of them.