“Carrying Debt to the Grave? The Increasing Indebtedness of the Elderly”
Look what came to town last week: an international conference about debt among people aged 65+. What motivated the conference?
- In Canada in 2012, 42.5% of seniors (aged 65 and over) still had debt.
- This rate of senior indebtedness marked an increase of 55% since 1999.
- The problem of debt among seniors crosses international borders.
- People in different countries have been dealing with the issue, but there has been little international discussion about it.
- Experts from Canada, the US, Portugal, and the Netherlands came together to share ideas.
What is causing indebtedness among seniors?
- Gendered senior debt: Female seniors often don’t have a good pension. Many 65+ women who are single, divorced, or widowed are trying to get by on government benefits that don’t cover expenses.
- Big mortgage: Many seniors are carrying a mortgage debt into their “golden years.”
- Divorce: A recent Ohio state study indicates that divorce decreases personal wealth by 77% on average. Divorce is increasing among older people, leading many to resort to debt to make ends meet.
- Illness: Health problems are often a double-edged sword for seniors. They can’t earn an income due to their illness, and this leaves them less able to meet the health care expenses related to their illness.
- Taking on debt to help family members: Increasingly, seniors are supporting their adult children.
- Elder abuse: Financial abuse of elders often involves bullying or manipulation by adult children. Many seniors who suffer from elder abuse cannot bring themselves to report it.
Avoid financial vulnerability in your senior years
Personal debt is going up overall, and more so among seniors than other age groups. The trend that saw a 55% increase in elder-debt from 1999 to 2012 continues. If you are “going with the flow” in your money management, there is a good chance you’re headed for golden years of financial vulnerability.
What can you do now to avoid it?
- Women, don’t count on the prince. You are not going to be rescued from your finances via romantic love. Decide now that you will be your own hero. Whether you are married or not, whether you are perusing a career or are a stay-at-home mom, ensure that your future will be provided for (not just your husband’s).
- Retiring with a mortgage? Think again. Crunch the numbers. Will your decreased retirement income allow you to carry this debt? Will your retirement lifestyle be compromised by it? Instead of bringing your mortgage with you into the future, consider renting – or downsizing to a house or condo that you can pay for outright.
- Take care of your marriage. Nurture your relationship, and confront the issues that trouble you. Do not keep the peace. Do not grin and bear it – not even “for the kids.” One of the best gifts you can give to your marriage is to confront your spouse honestly. Will it be messy? Probably. But not as messy as the divorce that will explode later if you don’t. Do not assume that if you’ve made it this far, your’e home-free. People split up at all ages, and the financial impact for most is devastating. Nurture your marriage with both love and honesty. Learn to assert, listen, confront, and compromise. It’s ongoing. That’s what “happily ever after” is made of.
- Face your mortality. I know people who assume that they will be able to earn an income until their dying day. “I love my work,” they say. “It isn’t even like work for me. It’s more like play. I don’t want to retire.” While it’s wonderful to find work you love, it’s terribly naive to count on being able to continue it through your senior years. There are examples of people who work right through their 60s, 70s, and even into their 80s, but there are far more examples of people who have to stop working in their senior years because of declining health.
- Save for retirement. See above. Also, don’t count on the government looking after you. Government benefits are a great bonus, but they are not enough to cover all expenses through the senior years. Besides, they are not guaranteed. As governments deal with increasing national debts, they are stepping back from spending on social support. Adopt the mindset that you will finance your senior years.
- Let your young children experience the consequences of their actions. When we step in to protect our children from the consequences of their actions – at least those they can withstand without harm – we rob them of the chance to develop strength and responsibility. They miss out on opportunities to gain resilience, to work towards their own solutions. They lose confidence. Allow their mistakes to help them grow up.
- Let your adult children experience the consequences of their actions. One factor involved in the financial vulnerability of seniors is the debt many take on to help their adult children. Learn to love and support your adult children without bailing them out. Stand behind them as they face what life and their own actions throw at them. Don’t stand in front of them to shield them from it. And don’t weaken your finances in the mistaken belief that you’ll strengthen theirs. If you do, chances are they’ll be back for more the next time crisis visits. (Of course, there are circumstances when helping adult children financially is the best thing to do.)
- Do not “save face.” Report anyone who is committing elder abuse. There is an oppressive compulsion to save face in so many families. The “shame” of family troubles – whether in the form of addiction, abuse, mental health, or broken relationships – is magnified as it is kept secret. If you know of elder abuse – financial or otherwise – brave the awkwardness and report it. Don’t “protect” the family secret.
Government policy vs. personal policy
I hope that the international conference on senior indebtedness last week was successful. I hope that the experts who participated will return to their respective countries with effective strategies to address the troubling trend. But I have more hope in the outcome that would result if the elders of the future – and that includes all of us under the age of 65 – committed themselves to personal policies against the grain of that trend.
What do you think? Is it the job of governments or of individuals to foster financial health for seniors? Both? What do you think should be done to address the growing trend of elder indebtedness and financial vulnerability?
*Image courtesy of Pixabay