Rising Debt Troubles for Seniors
By the time a person reaches retirement age, they are hopefully at a financially secure point in their life. However, these days, more and more people are reaching retirement age with significant debts. Perhaps even more concerning, many seniors now have increasing levels of non-mortgage debt, such as credit card debt. Credit card debt is difficult for anyone to pay down, but especially for a senior citizen on a fixed income. Senior debt troubles is such a large issue that, in 2017, experts from around the world met in Ottawa to discuss this growing problem.
Credit bureau Equifax released a study in 2015 that showed seniors are increasing their debt loads at a much faster rate than the rest of the population. Those 65 and older increased their debt loads by 4.9 percent in the quarter studied for the survey, compared with the average debt load increase of 2 percent for the same time period.
Why More Seniors Are In Debt
There are many reasons why more seniors are in debt. One reason is a similar reason to why the general population is in more debt: low-interest rates have made borrowing money an attractive option. When it’s cheaper to borrow money, people are more likely to do so and seniors are no different.
In addition, many seniors have much more active lives than the retirees who came before them. More and more seniors want to travel, have new experiences, and be more active in their retirement. When you combine this with the fact that people are living longer – and that interest rates are lower – it paints a picture of why seniors may be increasing their debt loads.
Another possible reason is that seniors are taking on debt to help their families. Education costs and housing costs are rising in many parts of the country, so many seniors take on debt to help their children or grandchildren afford those costs. While this is certainly admirable, it can lead to significant financial troubles.
What Seniors Can Do About Debt Issues
One of the main things that seniors can do to improve their financial situation is to have a budget and stick to it. While everyone needs a budget, it’s especially important for seniors since many are living on a fixed income. If you’re not working, and living off your savings and pension, you need to be very diligent about budgeting. While it’s certainly possible for seniors to enjoy life, take trips, and have new experiences, it’s important to remember that this goes hand-in-hand with budgeting. If you’re budgeting your money properly, you’ll be able to afford many of the things you want in life without getting into financial trouble.
It’s also important to make sure to save for emergencies. While traditional advice is to have several months of salary saved in case you lose your job or are unable to work, this advice does not really apply to seniors who are often living off pension and retirement savings. However, an emergency fund is still important as life is unpredictable. Sudden unexpected expenses such as broken appliances or emergency home repairs can happen at any time, and if someone does not have an emergency fund, these costs can lead to debt troubles. That’s why it’s important for seniors to put an “emergency savings” category into their budget. Financial emergencies can still occur, even to those who are retired.
Finally, seniors have to be aware of their current financial situation and learn to live within their means. This may mean that they won’t be able to help their children (or grandchildren) as much as they’d like to, but it will ensure that they won’t be saddled with significant debt. If you’re in a large amount of debt, you’re not able to help your family at all, and you might leave them worried about your finances. Instead, it’s a much better idea to stick to a reasonable budget and stay financially stable.
Getting Help with Debt
If you are struggling with debt, it’s important to know that there are options. Many seniors are very proud and they do not want to get help with their financial issues. They would rather struggle with their debt quietly than admit they have a problem. For a lot of seniors, getting help with debt is equal to failure and they are ashamed of their situation.
However, there is no shame in getting help with debt issues. In fact, speaking to a Licensed Insolvency Trustee about your debt troubles is often a much smarter option than continuing to struggle. A Licensed Insolvency Trustee can help you understand the different options available to you, and some of these options may be more affordable than continuing to struggle with debt. Contact us today to find out how we can help.