Normally, it’s younger, less world-wise Americans who mount up huge credit card debt. But this recession is different – in fact, it has a shade of gray attached to it. That’s because it’s older Americans (65 and older) who are burning through their credit cards faster than ever. And that has some serious “quality of life” ramifications for U.S. seniors.
Here are the facts. According to a study from the American Association of Retired People (AARP) it’s senior citizens 65 and over that comprise the demographic with the fastest-growing credit card debt. That’s just for starters. A 2009 study by the public policy group Demos says that seniors at or below the middle class now bear an average of $10,235 in credit card debt.
That’s up 26% since 2005. Contrast that to the rest of the U.S. adult population, a wider demographics that saw only a 3% increase credit card debt during the same time period (to $9,827).
Why the increased credit card burden for U.S. seniors? It’s something of perfect storm, brewed in equal part by advanced age (seniors with disabilities are among the heaviest users of plastic), the sour economy (which has sent plenty of Americans 50-and-up to the unemployment line well before they were ready to retire) and the steady devaluation of homes and retirement accounts.
It’s not like the older set is blowing their credit card balances on frivolous items like Viagra or Virginia Beach golf vacations. Demos says that seniors are using their cards as a “plastic” safety net. Medical expenses are a common factor – the Demos study says that Americans 65-and-older have an average of $2,194 in credit card related medical expenses.
So, if you’re a debt-burdened senior, near or in retirement, or have a loved one who is in the same boat, the sooner you deal with the issue, the better off you’ll be.
Where to start? If it’s your parents in debt, start by helping out, if you’re in a position to do so. After all, our parents took care of us and now it’s our turn to take care of them. Offer to handle a specific expense – like the monthly grocery bill – and start to relieve some of the financial pressure that parents mired in credit card debt may be suffering.
It’s also a good idea to pony up some cash for a visit to a financial adviser, or a good accountant. Most initial visits with financial professionals are free anyway, so why not see if a savvy money professional can help peel the plastic-induced debt? An impartial third-party financial adviser can also keep the emotions out of any debt discussion - a handy advantage for families looking out for their debt-burdened parents.
For siblings addressing a parental credit card issue, it’s important to use the velvet glove approach. Don’t make demands – but do engage in a dialogue where kids and parents are collaborators. No parent wants a lecture from Mother (or Father) Superior when they have a credit card problem.
If you can face up to the problem (as early as possible) and craft a plan that places a priority on savings and a pox on debt, you’ll have the best recipe for getting out of credit card debt.
Come to think of it, that’s good advice for credit card consumers of any age.
—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.