RETIREES UP AGAINST DEBT
January 23, 2007
Soaring health care costs are hitting seniors at a time when more employers are cutting back on retiree medical and pension benefits, leaving a growing number in debt because they have no choice, according to debt counselors and a growing body of research.
- From 1992 to 2004, the percentage of households 55 and older with overall debt grew faster than the rate of the overall population.
- Those 75 and older packed it on most quickly; the average load for those households with debt shot up 160 percent to an average of $20,234 during this time, according to research by the Employee Benefit Research Institute.
- Among households 65 and older, the average amount of credit card debt more than doubled from 1992 to 2004, to $4,907, according to Demos, a New York think tank.
Complicating matters is that many seniors live on fixed incomes. One illness or disability can plunge them into crushing debt, which is becoming more often the case. Amid the soaring housing market of recent years, those 55 and older, like others, have piled up record amounts of mortgage debt:
- From 1992 to 2004, the percentage of households 55 or older with housing debt rose to 36 percent from 24 percent, the Employee Benefit Research Institute found.
- The median amount of mortgage debt rose 63 percent during this time, to $60,000.
Worse, a growing number of seniors with mortgage debt also carry credit card debt, says Deanne Loonin, a staff attorney at the National Consumer Law Center. "The two are interconnected, because if you're taking on more debt because you're short of cash, then you're going to be taking on both kinds of debt."
Source: Kathy Chu, "Retirees up against debt," USA Today, January 23, 2007.
Browse more articles on Economic Issues