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Seniors Using Credit Cards To Pay Debts More Often
Jan L Warner & Jan Collins

Question: My wife and I are in our mid-70’s. I’m retired from a mid-level government job, and my wife only worked part-time because of our decision for her to stay home to raise and educate our three children who, we are proud to say, are all educated and working.

But we were not so fortunate: We have lost better than 40 percent of our modest nest egg (stock portfolios and IRA’s) in the past several years, and have not been able to make a dent in recovering financially. We have been reading about the “economic recovery” for awhile now and have been waiting for it to come to our house, but have not yet heard the “knock at the door” yet.

Instead, we are finding that when we take more money from our IRA’s to pay expenses, more of our Social Security is taxed. This has left us doing what we always told our children not to do: using credit cards to make ends meet. The rates on the seemingly good low-interest credit card deals have continued to increase, and we are finding ourselves slipping further and further in the hole with more than $20,000 in credit card debt. We’re afraid that we will outlive our money, and I am concerned that if I die first, my wife will be left destitute and homeless. Are we doing something wrong, or are all seniors feeling the pinch?

Answer: You certainly are not alone. In addition to receiving more and more questions from our readers about the financial pinch of this “economic recovery” on seniors, based on recent studies, the credit card debt of Americans over age 65 appears to be rising at epidemic proportions, with a nearly 90 percent increase over the past 10 years.

According to one study, seniors on fixed incomes owe more than $4,000 in credit card debt. This is attributed not only to the stock market tumble, but also to increasing costs of medical care and prescription drugs in this “non-inflationary” economy. Since most seniors can’t just go out and work a few more hours to take care of their rising expenses, they turn to credit cards. And, as you and many seniors like you have learned, credit card debt is very expensive given rising interest rates in a flat economy and late fees for tardy payments.

According to the American Bankruptcy Institute, the seniors who filed for bankruptcy protection last year had nearly $36,000 in credit card debt, compared to $18,000 for those filers between ages 40 and 49. And it is truly frightening to learn that not only has the number of Americans over age 55 who seek credit counseling grown substantially, but the number of those over age 75 seeking such help is growing even faster.

Instead of college students and yuppies, seniors are fast becoming the “credit card generation,” spending more than 30 percent of their income on debt payments. And, unfortunately, by the time seniors seek counseling, it’s often too late.

Taking the NextStep: Unfortunately, unlike our federal and state governments that can operate with huge deficits and not be foreclosed against, seniors have no such protection. Analysts tell us that if you make investments in the stock market, you must be patient, expect ups and downs in your portfolio, and give it five years or more. Unfortunately, seniors with immediate – and unanticipated-- needs don’t have the luxury of five years. One option for seniors is to consider reverse mortgages to handle unfunded monthly liabilities. Available in many forms, these debt instruments allow you to use the equity in your home and not repay it until you move out or die. Credit counseling is a prerequisite. Who would have thought that our “Greatest Generation” would be facing these trials in their golden years? Since you can expect nothing but lip service, increased property taxes, and increased medical costs from your elected officials, we have two suggestions: 1) Be proactive in your planning, and, 2) if you feel your leg getting soaked, look to see if you might be close to a fire hydrant because it sure isn’t rain.

For more information on the sources of these studies, and to find out more about reverse mortgages, see the links at

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