Fifty years ago, it was fairly common for seniors in the United States to enter their retirement years with mortgages paid off and a nest egg built to supplement any social security earned during their working days. Today, things have changed. Many seniors are now facing debt and bankruptcy as they enter their retirement years.
According to data collected by the Employee Benefit Research Institute, the average debt held by
seniors has ballooned to $50,000 in 2010, up 83% since 2001. Most of the debt ballooning for seniors is credit card debt. Credit card debt is normally accompanied by high interest rates and high minimum
payments. When both are added to the debt mix, it can provide a recipe for bankruptcy.
More seniors today will be forced to live on smaller fixed income in relation to what it costs to live. Living on a fixed income is hard enough for younger or middle aged adults, but for seniors, living on a fixed income can be downright potentially devastating. Any sort of unexpected financial problem can push a senior, without the ability to start over in their career, into bankruptcy.
Seniors often face a multitude of problems when it comes to living on fixed incomes. Not only can living costs rise above what their fixed income is, but unexpected costs seem to occur more to this particular group of citizens. With healthcare costs continually rising and seniors prone to illnesses associated with aging, seniors can face horrific medical bills that can ruin them financially.
Planning for retirement years has never been more important than it is for today’s seniors. Many of today’s retiring seniors invested in the stock market for their retirement planning. Many have been successful in their planning while others have not been so fortunate. With the stock market remaining so volatile for such a long time, the seniors who retired or pulled away from the market at the wrong time lost a substantial portion of their retirement income.
To compound today’s problems, more seniors are entering retirement still owing for homes that are underwater and that do not have enough equity to qualify for a reverse mortgage. Only 24% of homeowners over the age of 62 had mortgage debt in 1992, but that figure soared to 45% in 2010.
To top it off, the baby boomers now entering retirement years can potentially increase the financial problems of retiring seniors. The boomers were raised in an era where they felt a moral obligation to pay their debts at all costs. Many are spending their retirement accounts to pay down their debts. In effect, they may be satisfying a few creditors today, but the problem can rise up to haunt the rest of society. It is rest of society that will have to take care of the seniors not able to sustain their retirement years because of the dilapidation of their retirement accounts.
With the baby boomers entering retirement age by the millions, there will be no easy solution to the fact many of these seniors will be faced with huge
debts, then bankruptcy in post retirement.
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