Elder Indebtedness on the Rise: Seniors of the Future, Be Proactive NOW

“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

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12 CommentsLeave a comment

  • I believe both, governments and individuals should be involved in providing education to our seniors. The burden that any individual who’s not financial healthy puts on their family, local community, government, etc can be huge. My mom lives in a retirement community and in the United States, there are many of these types of communities in varies states. It would be great to target these with immediate education/information. But as you point out we need to also educate those approaching age 65, so they can begin to prepare as well.

    • Thanks Brian. My mom is also in a retirement home, and there actually have been guest speakers in talking about financial planning – wills and estates at this point. Your mom is a quite a bit younger than mine (in her 70s I think?), and I think that a retirement community would be a great place to teach financial literacy. Those approaching 65 should definitely prepare, but the sooner people start, the better. I’m encouraging my kids (as you are encouraging yours) to prepare from the get-go.

  • I don’t think this topic gets talked about enough. We hear over and over again about student loans and debt in your 20’s and we also hear about mortgages, credit card debt, and navigating your 30’s and 40’s. But what about after all that? I rarely see posts and/or articles talking about the things that you have mentioned here today. No one wants to enter their senior years in debt. And elder abuse is unfortunately a horrible thing that can happen and that too is not talked about enough.

    Great post today, Ruth!

    • Thanks Mackenzie. I think the reason why we don’t hear so much about this topic in the bloggosphere is that blogs are generally read by people younger than the 65+ age group. Also, people who are 65+ tend to be more reserved and private than those who are younger, so while these topics might be presented as news items, they’re not discussed personally. The interest here among bloggers and blog readers might be for their parents’ generation more than their own. But we’re all going to get there some day (sooner for some than others) … Best to have eyes wide open about it.

  • Social Security in this country is often called an entitlement. It is most certainly NOT an entitlement. It is paid into throughout a person’s working life. It doesn’t keep you in the lifestyle to which you are accustomed, but it is a good supplement. I’m often amazed at how many seniors, some into their 90’s, are still working, and if you ask them why, it’s because they need the extra income just to survive. Maybe it IS poor planning by the individual, but we all pay into our governments through taxes, and it would be nice if the people paying into it could be taken care of at least as well as all of the other countries they send our tax dollars to. Thank you. I’ll be putting away my soapbox now. 🙂

    • I appreciate your soapbox, Kay! And I believe in government programs that ensure people are cared for when they’re vulnerable – especially when citizens contribute through their working lives. (I am Canadian after all – living in the land of “free” health care that we all pay for through our taxes.) I would just caution people against thinking “the government will look after me.” In Canada, our Old Age Security and Canada Pension Plan payments don’t add up to enough to meet the needs of most seniors – and I’m sure the same is true of Social Security in the US. I would encourage anyone and everyone to invest in their own retirement savings to that they will be more financially secure in old age. Now get back up on your soapbox!

  • The two things that strike me the most are the mortgage debt into retirement and the support of adult kids. I do wonder about the wisdom of 30-year mortgages for most people, especially since for so many people it won’t end until well after their retirement date. The long mortgage allows people to buy more house than they would otherwise, but most people don’t really need more house (the average home size and accompanying price tag have risen quite a bit.)

    As for the support of adult kids, I see it with my parents.It can be so harmful, not just to the parent’s finances but also to sibling relationships and the adult child’s long-term prospects. I know that I have extremely mixed emotions about my younger brother…but my ability and willingness to support him only goes so far. My other brother feels the same. When my parents can no longer support him? We don’t know what he’ll do or even if he’ll be able to do what he needs to.

    In the meantime, I try really hard to let my daughter find her own way when I can. At seven, she doesn’t need to feel the consequence of every lapse in judgment, but she pays for some.

    • I’m sorry to hear about what you’re going through with your younger brother. Although I don’t know his situation or limitations, I think you should feel free to spell out for all concerned what you are or are not planning to offer in terms of support. No doubt, it’s a loaded issue – laced with guilt. I hope you will not be manipulated into doing or giving more than you judge to be right or fair.
      I’m with you on the mortgages. 15 years or under is ideal, but 30 – especially when that goes beyond retirement age – shouldn’t even be considered.
      I’ve modified what I wrote about younger children. Your comment made me look back at it – and it was too strongly worded. For a seven-year old, of course there has to be a balance. Thanks for drawing my attention to that : )

  • Great post Ruth! My husband and I were a pair of “those” seniors – $97,000 worth of debt and “officially” retired. Then we got smart, started learning how to get out of debt and six years later were debt free. It took a lot of sacrifice over those years, but now we have been debt free for two years and the best is yet to come.

    • Thank you so much for sharing your experience in response to this post, Nancy! I hope that any senior who feels that it’s hopeless to improve personal finances will read your comment. You make it sound like the victory is sweet!

  • We are working super hard to pay or mortgage off before we turn 40. While we can’t completely control our health, we do try to eat organic and avoid processed food and junk food as much as possible to reduce our chances of having a related illness later in life.

    Regarding our children and college, we want them to earn as much college credit in high school and consider alternative college options that are significantly less expensive than borrowing every single dollar like I did.

    • With your proactive attitude, I’d say you will avoid elder debt and the financial vulnerability that can come in old age – though circumstances outside our control can always happen. Mortgage-free by 40? That will be sweet!

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