Sunday, August 30, 2009

Grandma Goes In Debt

More (depressing!) food for thought in USA Today's story "Credit Card Debt Rises Faster for Those 65 and older."

The great bugaboos of old age--medical bills and adult children--appear to be the culprits.

The rate of increase in debt among seniors is breathtaking. The study quoted in the article shows that low- and middle-income consumers 65 and older carried $10,235 in average card debt last year, up a whopping 26% from 2005. Compare this to credit card debt for all borrowers surveyed which rose 3% during that time, to $9,827.

Much of the increase is attributed to the cost of living, combined with reductions in available retirement funds.

According to an associate director of Demos, the organization that conducted the study, "The frivolous spending idea, that's not what's driving families into crazy debt. The expense that most affects families is the cost of living."

I dunno about you, but these statistics worry me even more than the increasing debt load being accrued by young adults in college--at least our younger citizens have another forty plus years to earn money and tame the debt.

Not helping matters was the survey's finding that older folks are not only borrowing more, but they are paying higher interest rates for the privilege.

It's stories like this that make me more determined than ever to get rid of my debts BEFORE I head into retirement.


Sharon said...

My own MIL was in dire straits with credit card debt but didn't tell anyone until a creditor threatened to put her in jail! Oh, how I wish I spoke to that person....

She ended up doing a reverse mortgage, and has a sizeable amount of cash to utilize until she dies. (She is in her 80s). She, unfortunately, is only living on her husband's social security. When he passed away, she was left with about 60% less income.

I think the elderly are taken advantage, and in my MIL's case, her charges were because of the numerous medications her husband was on. Some of the medications cost around $500.00 (for the month!) Criminal.

Florence said...

There was an article in today's NYT about elders divorcing in order to keep the surviving spouse from becoming destitute. This aging business is not for the faint of heart...

BeyondBankrupt said...

To avoid having credit card debt, each user must be responsible enough in handling their finances. Instead of using a credit card, if you have enough cash to spend then better use it. Or look for a credit card company that offers lower interest rates. As much as possible pay the principal amount that you borrowed to reduce your debt.
Avoiding, Understanding and Surviving Bankruptcy

Anonymous said...

Cash will always be king. Before retirement have all your debts paid off, and reduce your credit cards to one that you can pay off each month. It can be done. The freedom is worth it.

See Ya