Seniors who came of age during the 1929 depression prided themselves on having little or no debt. Today's seniors are not as lucky, with exponentially higher medical costs and credit card debt.
When you live on a fixed income, any increases in your living costs present a huge challenge. For Manny Martinez, whose sole income is his monthly Social Security check, even living in rent-controlled senior housing doesn't protect him from being squeezed when costs go up. There are months when he has no choice but to accept food from the very same church food bank where he is a regular volunteer.
Martinez said it doesn't pay to get a part-time job because his rent would increase.
Martinez hasn't had to borrow money, but his situation is similar to many seniors who are struggling to get by, says The Daily Item in "New Report: More seniors falling into debt."
The report found that borrowing by seniors has doubled their debt in the past decade, with more than 61% of households headed by an adult over 60 having some form of debt.
People frequently have mortgages later on when the kids go to college and the parents refinance or move into a new home. Or a spouse passes away, and the surviving spouse is trying to stay in the home. They have less income, but taxes, household expenses, heating and cooling costs, plus other bills remain constant.
The National Council on Aging report says that among older households with debt, the median total debt was $40,900 in 2013, which is more than double what it was in 2001. One third of senior homeowners owed money on a mortgage or home equity line of credit, with 30% owing payments that were more than 25% of their income.
Seniors are also taking payday loans at a rate four times higher in the past five years.
More than 90% of those polled by the report say that medical debt threatens seniors' finances, followed closely by credit card debt (87%), and the increasing costs of household utilities at 84%. The survey, which included results of a survey of the professionals who work with seniors, also reported that 25% of these professionals' clients chose not to undertake necessary repairs of their homes and cars because of their debt load.
Reference: The Daily Item (March 8, 2016) "New Report: More seniors falling into debt"