Difficult to pay back on limited income
Many senior citizens are finding themselves in need of a financial counseling agency as they grow older. Soaring health costs, rising interest rates, unplanned expenses such as the death of a spouse, and now, rising gasoline prices are affecting millions of seniors.
In 2002, more than 450,000 people over the age of 50 filed for bankruptcy, according to the Consumer Bankruptcy Project at Harvard University. They also documented that many seniors spend more than 40 percent of their income on debt repayment. “We have definitely seen an increase in the number of seniors seeking our assistance,” stated Kerry Porter, of Consumer Credit Counseling Services. “Many times its due to unexpected expenses, especially when the person is on a fixed income.”
Living longer is an additional cause for the increased debt in older generations. Older people are often called upon to support very mature parents as well as their adult children. Having children late in life, thus, developing a large debt that is difficult to pay off directly before retirement is also a contributing factor.
Experts warn and urge seniors to be aware of difficulties with debt and offer some tips on combating it:
1. Seek help–talk openly without shame or embarrassment to family members about financial situations. They will want to help.
2. Prioritize debts—Pay off important debts that my affect property or vehicle first.
3. Reverse mortgages—This program offers homeowners additional cash to repay high interest debts.
4. Prescription Drug Programs—research as many benefits and plans available to cover the cost of prescription drugs.
5. Spousal benefits—Divorced seniors may be eligible for spousal benefits if they were married for at least ten years. Check with legal aid.
6. Return to the workforce—Part-time jobs can reduce the stress of debt very easily, in addition, be very rewarding.
7. Use credit cards sparingly—Implement a plan to use them only in the case of an emergency. Pay back more than the minimum each month.