We like to daydream that our senior years will be not just a retirement from long work hours, awful commutes and annoying bosses, but a respite with fewer financial worries. Increasingly, however, too many seniors are retiring with a lot of debt or accumulating new debt.
The National Council on Aging looked at debt among seniors, and its survey results are troubling. Professionals who work with seniors were asked questions about their clients’ debt load and how it impacted their economic security. The council’s report, released this week, found that debt is a major issue, especially for seniors who are in poor health and already struggling financially.
“Living on a fixed income can make it difficult to budget adequately to leave a cushion for emergencies,” the report read. “As such, unexpected costs — an unforeseen hospitalization, a vehicle requiring repair or even emergency veterinary care for a sick pet — can plunge seniors into unmanageable debt.”
Fifty-one percent of the surveyed professionals said they frequently deal with seniors who have overwhelming medical debt, and 36 percent said they see seniors with unmanageable, overdue utility charges. Almost 30 percent said they frequently see seniors with burdensome credit card debt.
We know from other surveys that U.S. households have been piling on debt. And unfortunately, that trend has not escaped the senior population. The Federal Reserve Board’s Survey of Consumer Finances found that among older adult households with debt, median total debt rose from $18,385 in 2001 to $40,900 in 2013. One in four senior households with credit card debt had a balance of at least $7,200 in 2013.
To some, this might not seem like much. But seniors are racking up debt at a time in their lives when they’re likely to be on a fixed income. They can’t rely on raises or job-hopping for better pay to help dig them out.
In 2007, only 0.5 percent of senior households had taken out payday loans. By 2013, it was 2.2 percent. With payday loans, borrowers give lenders postdated personal checks or authorize an electronic funds withdrawal. The loans are meant to be paid back quickly, say by the time the loan recipient is paid again or gets a benefit check. But customers can spend months trying to pay it back, sometimes rolling one loan into another and amassing huge fees. I wouldn’t want to see a single senior end up in this scenario.
When seniors can’t make ends meet, they start to make financial compromises, said Maggie Flowers, the National Council on Aging’s associate director for economic security. She added that some professionals who work with seniors have reported that they’ve seen seniors who cut their medication dosages and cancel doctor appointments, miss rent or mortgage payments, don’t make home repairs, skip meals and avoid meeting up with friends because they can’t afford it.
“If they don’t make needed home repairs, that increases the risk of accidents and falls,” Flowers said. “Regularly cutting pills is extremely dangerous. Avoiding social engagements can lead to isolation. Missing meals can lead to nutrient deficiencies.”
In addition to bringing needed attention to this issue, the council is offering tips at www.ncoa.org/seniordebt. It also offers the BenefitsCheckUp tool (www.benefitscheckup.org), a free resource that helps people determine if they qualify for programs that provide financial assistance. Answer a few questions, and seniors get a general list of aid. Provide additional information, they’ll get some information with state-specific programs and other benefits. Its EconomicCheckUp tool (www.economiccheckup.org) provides budgeting assistance, calculators, tips and other resources.
If nothing else, use the report to start a conversation with a senior. This isn’t about somebody else’s relative; it could be your loved one, and it may touch you one day.
Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.
