According to CNN Money, using data from the Federal Reserve, the average debt load carried by an American over 65 was $50,000 in 2010, which represents an 83% increase since 2001. The most common types of debt among senior citizens are mortgage and credit card debt.
The reason for rising debt levels among those 65 and older seems to be two-fold: on the one hand, many seniors, like other Americans, borrowed and spent too much in the years leading up to the recession. This means that their debt levels were already reaching unsustainable levels when the bottom fell out of the market in 2008. This put many in a tenuous financial position when they found themselves suddenly underwater on their homes and with limited access to credit. On the other hand, many of today’s seniors are retiring without employer-sponsored pensions, and some failed to save enough to make ends meet in retirement. This means that many have to rely on credit cards to cover even basic living expenses, pushing seniors into deeper into debt.
[Check Your Credit: Don’t Guess. Know.® Get your free credit report and score. No credit card required.
Rising debt levels among any demographic is problematic, but experts are particularly concerned about senior citizens being in the red. Many older Americans are unable to work due to medical conditions, putting them in a difficult position when it comes to paying off debt they’ve accrued. Also, when seniors are unable to cover their costs, many begin to rely on adult children; this puts an additional financial burden on those in their working years. All in all, high debt loads among older Americans bodes poorly for both their families and the economy at large.
Are you concerned about rising debt levels among senior citizens?