Debt gaining on many U.S. seniors
|
|
|
|
"Debt for older people isn't due to irresponsibility.
It's due to medical costs, increased gasoline prices, increased
property taxes," says AARP's Hurme. "The 65-plus individuals
are not the ones who have come into retirement with big credit card
debt. They're using their credit card to buy groceries. They just
can't make ends meet."
Credit cards
a last-ditch resource
Often called the "plastic safety net," credit cards have
become the last-ditch resource for plenty of seniors struggling
to pay for the
basics. But it's a safety net frequently fraught with hidden traps
and pricey fees that quickly push bills out of reach for the elderly,
says Cathy McConnell, a lawyer and executive director of the West
Virginia Senior Legal Aid.
McConnell contends that pressure for seniors to use
plastic is overwhelming.
"At 60, 70 and 80 years old, these seniors are of a generation that values honesty and being good for their word. These are people who, early in life, may have never used credit or if they borrowed, they may have done so with a handshake with their local banker," says McConnell.
McConnell's clients often jeopardize their well-being by paying as much as they can to creditors without leaving enough for utilities and other necessities. To pay card balances, others deplete life savings or liquidate retirement assets they'll need in the future.
Many risk the roofs over their heads. These days,
eight out of 10 seniors over age 65 own their home, U.S. Census
figures show. "There's substantial pressure among older homeowners
to tap into that equity to pay medical costs and get by," says
Hurme.
Mortgage balances a future problem
Meanwhile, mortgages -- whether they've been refinanced or not --
may become a growing financial problem for those heading into retirement.
Nearly 60 percent of households headed by someone age 55 to 64 had
outstanding mortgage balances in 2001, the Joint Center on Housing
Studies at Harvard University found. That's up from 46 percent in
1989.
Julie Nagle-Panizo of Skokie, Ill., feels the pinch
of an outstanding mortgage balance. The 66-year-old airline executive
was laid off in October 2006 when her sales and marketing department
at Japan Airlines relocated. She had been with the company for 33
years. She and her husband had refinanced their home to help pay
for their children's educations. Now they have 11 years of a 30-year
mortgage to pay off.
"I was hoping to work longer so I could pay more toward the principal," she says. "That's not happening."
She says she'll take a lower salary and do any job to raise extra funds for the mortgage. She has marketing and financial know-how, a bachelor's degree and a track record of being a dedicated employee. In the 18 months she's looked for work, she hasn't received a single job offer.
Resources seniors can tap
What can seniors do when bills outstrip income?
 |
Options for seniors in debt |
|
|
|
|
|
