The May issue of Money magazine arrived today. As usual, I devoured it in one sitting.
But that doesn't mean it was without its depressing moments. One of the first articles talks about the increasing debt loads carried by people older than 65. I'd link to the piece, but it's not yet up at the Money site.
Apparently, in the United States, a third of those age 65 or older still have a mortgage--up from 20% in the 1990's. The median amount owed is $56,000.
Worse, seniors owe an average of $10,235 on credit cards.
I will likely be among those with some remaining credit card debt when I turn 65 though I don't plan to retire until I get rid of it.
But my mortgage will be paid by the time I turn 65. The article's statistics are scary and do not describe a group I want to be part of.
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17 comments:
H, Grace, That number probably should be for people who carry a balance. I'll bet that applies to less than half of all the seniors i this country. ~ Diane
When we turn 65 we am going to be faced with the problem of where we will end up spending our senior years, as we are in private rental we are not going to able to pay the steep rents when we are on a pension.
I appreciate that its tough to be still paying off a mortgage when you are in your sixties but at least you have your own roof over your heads, or the option of downsizing, we are going to have very few options.
In comparison to those with a mortgage payment your credit card debt must seem minimal...
I did not read the article, but I am increasingly talking to friends who have decided to take all of the equity out of their house and "enjoy" their retirement." I have no idea how they see carrying a large mortgage through their 80's will be enjoyment, but they are insistent.
They are the group who have been underemployed for the last five years and are tired of never having anything nice after years of enjoying living.
I guess they don't remember our grandparents' stories of barely eating and using cardboard in their shoes during the depression. Their assumption is that cheap goods will always be available.
I don't get it! Grace you are on the right track!!!!
I think that increased mortgage level came from the reccession and cheap money. I hope that this is something that will reverse itself, for the sake of everyone on a fixed income.
Credit card debt, that's the biggie. High rates and fees. Ick.
That is depressing!
Don't become part of those statistics!
Naw, you're doing good. Don't let that article scare you. Fear sells!
My MIL had massive debt after my FIL passed away. It was all medical care debt and she ended up having to do a reverse mortgage. She lost his pension and one of her social security payments when he passed, so it was really, really hard. We help out, but it's tough for her.
Hi Grace!! I was so pleased to see your post up this morning!!
IMHO part of the reason for the sharp increase in debt among those 65 and over is this last recession. If you lost you were 50+ and lost your job for any reason, you probably had a dickens of a tine getting another one. And with the job loss went health care insurance so if you got sick, you were likely to run up debt to pay for it. A double whammy. (Now is when I usually step up on my soapbox and begin my rant about the need for a national health care system...but I'll spare you.)
Then you have children or grandchildren becoming jobless and/or homeless and moving back in to the family home.
Its a mess, a real mess. Thanks to the foxes who were in charge of the hen house.
Those are very scary numbers. My parents (60 & 62) & are in relatively good shape. They are both still working, & my mom will work until she's 65 to keep their health care. They made very little money throughout their lives, but paid off their mortgage at around 45. That enabled them to do a lot of other things as they got older, which I know has made a huge difference.
I have been enjoying reading your blog and have been inspired by it! I am 52 and also getting a late start on retirement savings BUT I just refinanced my house to get a 15 year mortgage AND set up every two week payments to knock 20 more months off of that in order to have my mortgage paid off 3 months after I turn 65. The increased payment will make my finances tight in the meantime but it will be worth it to get that mortgage paid off!
Interesting conversation. I know several people close to retirement age who will not have their mortgage paid off when they retire. One recently visited a financial planner who recommended they change their mortgage from a 10-year (which they just switched to a couple of months ago) back to a 30-year. Then to take their savings (saved for two daughters potential future weddings) and pay off credit card debt and car loans. If the daughters do get married he recommended drawing on their line of credit.
We have some relatives in their 80s who still have a mortgage (don't know why) plus condo fees, etc. They really struggle and have no way to increase their income. You are wise to attack all of your debt now and find a way to live within your retirement income.
Deedo--I meant to delete a duplicate comment and wound up accidentally but completely deleting your comment. Sorry about that.
In Canada average credit card debt is much lower HOWEVER it has been found that the reason for that is because people are paying off their credit cards with their LINES OF CREDIT!! I have NO credit card debt and my line of credit will be paid off by July, 2.5 years before I retire. I do have a small mortgage on my PEI property but will be able to pay that off when I sell my condo upon retirement. The next 2.5 years will be spent saving every penny I can! I won't be wealthy but with very few expenses I'll be ok.
Great ideas indeed! I will surely keep these in my mind!
The number like the number of people carrying CC debt in the US is inflated for people who carry a balance. About 50% of people in the US don't carry a balance. And another 30% carry less than $3k. It's the other 20% that inflates the average CC debt to $8k per person.
I agree paying off the mortgage is a big deal. I say this as I refi again into another 5/1 arm at 2.75%. Great rate and I am going to be able to pay off more of the mortgage faster.
But hopefully one day we'll be settled. I will weigh in next on condos versus homes.
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