Help for Seniors in Debt
When most people think of seniors in retirement, they think of people who worked hard their entire lives and now have the opportunity to relax and benefit from their life of working. However, the reality is that more and more seniors are finding themselves struggling with debt. These days, spending your whole life working hard may not be enough to guarantee a retirement that’s free of financial stress. In fact, a report from credit bureau Equifax showed that seniors have now reported three straight quarters of rising debt delinquency. A delinquent debt is any debt reported to a credit bureau as past due.
Why Seniors End Up in Debt Trouble
There are many reasons why seniors end up in debt during retirement, including:
- Rising levels of credit card debt
- Credit card debt is unfortunately easy to get into, but difficult to get out of. While most seniors try to reduce their debt levels before they reach retirement, it can be hard to pay off credit card debt because interest rates on most cards are very high.
- Smaller retirement savings
- In the past, most people retired with company pensions that provided them with a strong and stable income when they were no longer working. Unfortunately, this is no longer the case for most people. Many now have to save for retirement on their own, and that means a lot of people don’t have as much available in retirement as previous generations did.
- Increased cost of living
- Food, housing, transportation, and utility costs have been increasing and, in many cases, salaries haven’t kept up. This makes it tough to afford basic necessities, especially in retirement.
- Wanting to help children or grandchildren
- Many seniors find themselves in financial trouble because they want to help their children or grandchildren buy a house, pay for school, or afford many other costs. Young people today often graduate with large amounts of debt, and many seniors want to help their relatives who are just starting out. Unfortunately, this giving nature can be very costly.
How Seniors Can Avoid Debt
Debt can be very tough to deal with at any point in life and it’s especially tough in retirement. When you’re no longer working, you’re not earning an income. This means you’ll have to learn to live off less. Since your savings and pension will have to pay your bills for the rest of your life, you may not have much available to put towards debt repayment. This makes avoiding debt critical.
Here are a few things seniors can do to help them avoid debt issues.
- Limit credit card use
- As mentioned, credit card debt can be especially tough to pay down. The solution is to avoid using credit cards whenever possible. By limiting your credit card use, you make it less likely that you’ll end up in debt trouble. Stick to using cash or debit whenever possible, just be sure to track your spending so you don’t accidentally spend money you have allocated for another purpose.
- Stick to a budget
- Having a budget is important for everyone, especially those who are living on a retirement income. Make sure you come up with a plan that sees you spend less than you earn and then stick to it.
- Tracking your spending is critical when you’re on a budget. Write down purchases shortly after you make them, so you don’t forget anything. Not only does tracking spending help you stay on budget, it also gives you a clear picture of where your money isgoing.
- Consider downsizing
- Many seniors do not need to live in the same large houses they did when their children were at home with them. For some, the solution is selling their home and moving to a smaller, more affordable place. Not only can you likely make a profit when selling a large home, but a smaller property will also have lower monthly costs such as heating, electricity, and maintenance.
- You can also downsize other aspects of your life, not just your home. If you and your partner have two cars, think about whether you can get by with just one. If you’re no longer commuting to work, you may no longer require two vehicles. It can also be a good idea to spend less money eating out, for instance, since you’ll have more time at home to cook.
- By adjusting your retirement lifestyle, you’ll spend less and that will help you avoid debt.
- Look for other ways to help
- While you may want to help your children or grandchildren financially, you’ll need to make sure it makes sense for you as well. Before you provide any financial assistance, look at your budget and make sure you’re actually able to do so.
- If you’re not able to help financially, you can still assist younger relatives by babysitting their children, helping them with chores or errands, or doing many other activities that don’t break the bank.