Consumer Tips for the Elderly in Managing Debt
The economy has taken its toll on many Americans, especially senior citizens who live on a fixed income. Social Security has not had a cost-of-living adjustment since 2008. Retirement funds are shrinking as stocks drop, and interest rates for CDs and savings accounts are at record lows.
A greater number of senior citizens are overwhelmed with debt, especially on credit cards and mortgages. According to the Strategic Business Insights’ MacroMonitor, 39% of the homes where the head of the household was between 60 and 64 years old had primary mortgages, and 20% had secondary mortgages. In 1994, those figures were just 22% and 12% respectively. Mortgage debt claims a large share of their income, and home values still haven’t recovered from the housing collapse three years ago.
The golden years of retirement have become a difficult struggle for many seniors.
Debt Tips for Senior Citizens
* If you are healthy enough to work, get a part-time job. More and more senior citizens must continue working because they can’t afford to retire.
* Protect your finances against fraud or abuse. If someone else is buying your groceries or paying your bills, let a trusted third party monitor your bank account and credit activity. You can also give power of attorney to a trusted person who can oversee your financial affairs if you are unable to do it.
* Limit your credit cards. One or two may be necessary for purchases; more than that is too many. It is too easy to run up debt on multiple cards.
* Don’t use home equity loans to pay off credit card debt or to buy things that depreciate like trips, cars, and appliances.
* Avoid debt-relief companies that claim to lower your credit card bills and monthly payments. Many of these are scams that charge high fees and leave you in worse financial shape.
* If you need help, get advice from a trusted debt counselor. The National Foundation for Credit Counselors can help you find a credible counselor in your area. Call 800-388-2227 or go to the website, www.nfcc.org
* If there is little hope of paying off your bills, bankruptcy may be the best of bad options. A Chapter 7 liquidation filing discharges unsecured debt but you may get to keep your home, pension, and retirement funds.
Tips for Children of Senior Citizens
* Investigate the finances of elderly parents and be ready to step in to help. Admitting mistakes or financial problems is difficult, and your parents may be hiding their debt. It may require monthly or quarterly meetings to go over income and expenses
* Will you assume financial responsibility for your parents in the future? This may be the time to buy long-term care insurance or open up a special savings account for these future expenses.
* Do not co-sign credit card offers. If they have a card in their name, then you are not responsible to pay off your parent’s credit card debt, and their credit card debt will not transfer to you after they die. Do not co-sign for a credit card or other loans because you become responsible for that debt if they die or can’t pay it off.
* Look for help from outside resources such as local governments, senior centers, churches and other groups. You may find a non-profit or an agency that offers financial relief to the elderly in the form of prescription drug assistance, subsidized bills and even hot meals.
* Get your siblings involved. Divide up duties and help pay bills.
* Pay attention to your parents. Are there signs of memory loss or vulnerability to financial scams? You may have to take on more responsibility to protect your parents from bad decisions.