In the past, many Americans who approached their retirement were able to successfully reduce their debts so that they had no outstanding balances, but that trend may be reversing itself these days.
Today, millions of senior citizens and Baby Boomers are carrying sizable debts as they approach and even surpass their retirement age, making it more difficult to live on the fixed income that typically comes in consumers’ post-career years, according to a report from McClatchy Newspapers. In fact, the Employee Benefit Research Institute recently found that between 1992 and 2007, the percentage of households with people in their mid-50s and up which were carrying both housing and consumer debt rose to 63 percent from 53.8 percent.
That increase was even more problematic for those between the ages of 55 and 64, which constitute consumers’ prime retirement planning years, as 81.7 percent of those households also carried debt, the report said. Further, the average amount of debt carried by households 55 and older more than doubled during that 15-year period, to a total of $70,370.
Other research conducted in the past few months indicates that much of the debt now being carried by older consumers is held on credit cards and other consumer accounts, the report said. A recent survey by the public policy institute Demos found that the average amount of credit card debt for those aged 65 and older rose to $10,235 in 2008, up from $8,138 three years prior. This was the largest increase observed in that time among any age group. Further, the Federal Reserve Bank of New York recently reported that adults aged 50 and older carried roughly 17 percent of the nation’s outstanding student loan debt, totaling nearly $148 billion altogether.
The practical upshot of this is that more senior citizens are now dealing with significant financial difficulties, and many end up having to seek credit repair or debt management, the report said. Anecdotally, seniors are now heading to credit counseling agencies in larger numbers than any other demographic.
What can happen for these older consumers?
Increased debt burdens on seniors can be difficult to manage because they may not have the financial wherewithal to get out from under them in the way that those who are decades younger might, the report said. Seniors often have medical issues that can be costly to deal with. With many seniors living on fixed income, any emergency can throw their finances significantly out of joint, particularly if they don’t have the ability to handle any more debt than they already have.
Millions of consumers since the end of the recession have been left to wonder how to fix credit, and as a consequence, many have found that the best way to repair credit is to start being more conscientious in making all their payments on time and in full. Further, keeping balances to a minimum by spending only as much as they can afford to pay back in a given month will help keep their scores healthy.
