As Americans live longer, many are finding that their retirement savings isn’t enough to last them through their senior years. The fixed income provided by Social Security and other government programs often isn’t enough to get by. Consequently, many people are still paying off debt and even taking on more of it well into their 70s and beyond. Sometimes they do it for their own needs and sometimes to help family members.
A recent study by the Employee Benefit Research Institute (EBRI) found that almost half of retired people 75 and older are still paying off one or more loans. That’s double the percentage of people in that age group who were in debt in 1992.
While seniors typically have a smaller amount of debt (the median being less than $21,000) than younger people, it’s also harder to pay off on a fixed income. The average annual Social Security income is approximately $16,400. Unfortunately, some seniors cut corners in dangerous ways, such as not taking all of their prescribed medications.
The largest source of debt for retired seniors involves mortgages. Credit card debt is also an issue — and one that could get worse as interest rates go up. Some people in their 60s and even older are still paying off student loan debt (for themselves and/or their children).
One reason for the increasing amount of debt among seniors is that it no longer has the negative stigma it once did. Many of us had grandparents or even parents who believed in buying nearly everything with cash. If you didn’t have the money for something then and there, you shouldn’t buy it.
Few people have that mindset today, particularly when it’s easy to pay for things with a swipe of your phone or credit card. However, if you find yourself with so much debt that it’s impacting your life, it may be a good idea to consider your options for reducing that debt.
Source: USA Today, “Carrying debt into retirement past age 75 has become the new normal,” Russ Wiles, The Republic, accessed June 15, 2018
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