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Rocketing living expenses, shrinking savings and easy
access to high-cost credit cards are pushing debt levels higher
than ever for America's seniors. An increasing number of the nation's
eldest are putting their homes, retirement savings and livelihoods
at risk to pay the bills.
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| Grandma and grandpa in trouble |
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At the same time, many seniors are unaware of financial
strategies or federal and state laws that can help protect their
assets as they go through the process of paying off high debts or
-- in the worst-case scenario -- filing for bankruptcy. As a result,
these vulnerable citizens make missteps that could cost them dearly.
That's the consensus among experts who say the Madison
Avenue image of retirees -- healthy, prosperous folks playing golf
at the country club -- is out of step with reality for many seniors.
"Debt is growing across the country, and it's not avoiding older
persons," says Sally Hurme, senior project editor for financial
studies at AARP. Numerous studies support her claim.
Grim statistics:
One-third of retirees in a recent poll by AARP described
their current personal debt levels as a problem, and 7 percent called
it a "major" problem.
The number of seniors age 65 and older who filed
for bankruptcy jumped 213 percent between 1992 and 2001, outpacing
all other age groups, one study found. Health care costs are driving
the trend.
Debt levels for households headed by someone 75
and older averaged $20,234 in 2004, a 160 percent jump from 1992,
the Employee Benefits Research Institute reported.
Nelda Taylor's
story
A debilitating accident and family illness proved to be the one-two
punch that wiped out Nelda Taylor's life savings.
The 67-year-old Arlington, Texas, resident had saved
$68,000, but when Taylor was injured on her last job driving trucks,
her plans for a secure retirement skidded out of control. With three
herniated discs, Taylor was unable to work for two years. It wasn't
long before bills became unmanageable. Then Taylor's sister had
a stroke.
"I went through all my savings. I started charging
on my credit cards. I started using credit cards to pay credit cards.
I filed for bankruptcy," says Taylor, methodically ticking
off her financial slide before she sought help at a credit counseling
service.
Today, Taylor works part-time at a storage company.
Her paycheck enables her to chip away at $50,000 in credit card
bills on a payment plan designed by her credit counselor. Morale-boosting
treats are rare.
"I'll meet friends at a restaurant and get a
cup of tea. But I'll go home and fix a meal 'cause I can't afford
to eat out," she says. "My friends tell me 'I'll buy your
dinner.' But I just can't do that. I'd love to be able to give back,
but I just can't. So I don't let them."
Taylor's story isn't unique. One-fourth of seniors
65 and older on Medicare and 13 percent of seniors with other forms
of health coverage have trouble paying medical bills, AARP reports.
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