Three Reasons Seniors Are Struggling With Debt
Let’s face it–everyone is having a more difficult time making ends meet right now than they were prior to the recession and senior citizens are no exception. Most people picture a retirement of traveling and spoiling grandchildren. However, there are also countless seniors that struggle between social security checks every month and live on a fixed income. Too often, that monthly income is not sufficient and retirees are forced to use credit cards to meet their needs.
A study released in July showed that people over the age of 65 carried an average credit balance of more than $10,000. That’s a lot of credit card debt when you don’t have an income to work toward paying it off. The average debt load of a senior citizen was up 26% in 2008 compared to just three years earlier. Here are some of the reasons why seniors are racking up more debt.
- Their Savings Have Shrunk: Many seniors retire with some investments in the form of retirement accounts and other investment accounts. The market losses of 2008 took a big bite out of portfolios and many retirees were taking on some market risk to try to get their nest eggs a little bigger for the rest of their retirement. Although the market has made up some losses, the investment income for many seniors is down, and they are stretched thin as a result. An alarming number of seniors had very little money saved to begin with, and people just don’t have pensions like they used to.
- Medical Expenses Are Increasing: According to a recent survey, seniors with credit card debt reported that the single biggest item that they are in debt to creditors for is medical expenses. The average amount of medical expenses for a retiree in debt is just under $4000. There is help for seniors when it comes to medical expenses in the form of Medicare and Medicaid but there are also gaps in these programs that can only be filled with credit card spending for some seniors.
- Fraud: Unfortunately, senior citizens are a favorite target of scam artists and identity thieves. Many seniors are simply unaware of how closely they need to safeguard their personal information. They also are frequently invited to “free” seminars and workshops only to be talked into special programs that do them little good but cost thousands of dollars. Too many seniors are simply too naïve to know any better and there is usually no recourse for the victims of sophisticated frauds and scams.
The best thing anyone can do for loved ones that are in their later years and struggling financially is to monitor their financial situation and offer to help where you can. Even if you can’t help financially, you can help them make good financial decisions and avoid costly mistakes. Spending as a senior requires the same discipline as it does for people still in their working years and minimizing credit card debt is a difficult but important task no matter your stage in life.
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