The "Boomer-ang"
The Retirement Income Juggling Act

Carrying the Debt Burden

Debt-1500774_1920Regardless of age, accumulating debt is a way of life for many Americans, in particular Boomers. Even our federal government carries a heavy debt load.

We learn at a fairly young age about buying on credit. We continue to pay off student debt decades after completing college or graduate school. In order to buy a house, we obtain a loan (otherwise known as a mortgage) and pay interest on the principal for many years. Additional debt may accumulate through multiple credit cards, automobile loans and home equity lines of credit. 

Boomers are in an especially precarious position when it comes to debt. According to Experian, Boomers carry average total non-mortgage debt of $25,812. This unsettling number includes credit cards, store cards, personal loans and other non-mortgage accounts. The average mortgage debt for Boomers is $191,650. The average credit card balance carried by Boomers is $6,747. Boomers typically hold more credit cards than any other generation.

In August 2018, The New York Times reported on a study that showed Boomer bankruptcies were three times higher than in 1991, with bankruptcies for Boomers far exceeding all other filers. A more recent Times article (April 18, 2021) indicated that the pandemic has not made things any easier for Boomers. A new survey suggested Boomers had doubled their non-mortgage debt in 2020. Boomers commonly put expenses on credit cards and carry balances month-to-month, reports Susan B. Garland. She writes, "Also driving this rising debt load are soaring medical costs, the steep decline in pensions, growing housing expenses and low interest rates on savings. To make ends meet, many older adults are known to skip meals and to cut pills to stretch prescriptions, according to a survey by the National Council on Aging."

Boomers accumulate debt in another way that would have been unthinkable in prior years. During the pandemic and even beforehand, Boomers have been put in the unenviable position of helping their adult children financially. According to The New York Times article, the Employee Benefit Research Institute "found that 59 percent of people ages 65 to 74 who helped family members carried debt, compared with 47 percent who did not help." 

Eventually, debt catches up with Boomers -- and it can come with a big price tag. It is all too easy to consolidate expenses onto credit cards, only to find monthly payments ballooning and interest charges spiraling higher. That's when it may be time to get the assistance of a credit counseling agency. But buyer beware -- there are some "debt settlement" companies that can prey on desperate debtors, according to the balance: "Persuasive advertisements might promise you an easy way out of debt, or a way to simplify your payments. But these services often tack on expensive fees, it’s often not clearly explained what potentially negative effects debt settlement can have on your credit score."

Here are three key ways Boomers can ease their debt burden, according to

  1. Control credit card debt. "Toss the junk mail. Cut financial ties with your adult children. Pay off credit cards first, before other debt."
  2. Minimize medical debt. "Research health insurance options. Build health expenses into your retirement budget. Negotiate with healthcare providers."
  3. Pay off your mortgage. "Break big goals into small steps. Roll other debt payments toward mortgage. Think twice before refinancing."

Debt is a big deal for Americans. The balance reports that Americans accumulated $14.56 trillion of debt as of 2020, with $462 billion of that debt considered delinquent. If you are in debt, you are definitely not alone.

Still, carrying a heavy debt burden is no fun, and it is especially painful for Boomers.

Image by Rilsonav from Pixabay is a Wearever Top 20 Senior Blog and a Top 75 Baby Boomer Blog

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