Many Americans are carrying sizable credit card and loan balances, but new data shows that a growing number of seniors are facing this scenario. While debt can be crippling for individuals of all ages, those nearing retirement or seniors who have already left the workforce may face additional financial burdens as a result of these balances.
Data from the U.S. Census Bureau shows the median amount of household debt for Americans older than 65 had more than doubled between 2000 and 2011, climbing to nearly $26,000 from $12,702. Further, seniors experienced the largest percentage increase of any age group included in the survey. The Fiscal Times cited data from the Employee Benefits Research Institute, which showed that median credit card debt for seniors older than 75 increased to $1,800 in 2010, compared to $838 in 2007. These scenarios, coupled with a rising number of seniors lending money to relatives and entering retirement with a mortgage, indicate that more retirees are likely to experience financial strain during their post-working years.
Large balances can make it more challenging for working adults to devote the necessary resources toward retirement. Instead, funds that could be used to invest, bolster savings or purchase long-term care insurance are generally diverted toward monthly payments and interest charges. For those who are currently retired, a lingering credit card balance or personal loan can eat into their existing savings and increase the possibility of financial shortfalls during their golden years. To make matters worse, the job market, while improving, may still pose obstacles for seniors who want to reenter the workforce years after leaving a career.
Overcoming debt prior to or during retirement
Many seniors may feel alone in their situations, which can make finding viable debt management solutions seem hopeless. Further, many may lack the knowledge or education on ways to budget effectively, maximize repayment strategies and negotiate debt with lenders. Seniors carrying debt are encouraged to consult with a financial professional, such as a credit counselor or advisor. These individuals are equipped with the knowledge and resources to help borrowers create a customized repayment plan that works for their unique circumstances. In addition to helping adults eliminate their debt, licensed professionals can instill seniors with the information they need to plan out their retirement years accordingly to avoid falling short on funds.