The financial problems of senior citizens around the world persist, with the aging population remaining among the poorest demographic in many countries. In the United States, the plight of retirees in debt is no different, characterized by surging loans, decreasing assets and day-to-day budgeting problems. Money woes among the elderly affect not only their physical and mental health, but also put a strain to their relationships brought about by blames and regrets over bad decisions and actions of the past.
According to the research non-profit group American Progress, about 3.4 million seniors age 65 and older live below the poverty line. These are apart from the millions more who are just making ends meet or just above the poverty line. In 2009, 8.9 percent of American seniors earn below the poverty line ($10,289 for an individual and $12,982 for a couple). Likewise, one out of every five of our senior citizens earn below 150 percent of the poverty line.
Meanwhile, aging African-Americans and Latino-Americans fare worse, especially for households headed by someone over 75 years of age. A high 9 out of 10 African-Americans and Latino-Americans do not have sufficient resources to sustain their needs and and help their families.
SENIOR DEBT PROBLEMS
So many elderly Americans have amassed debts in their working years which remain unpaid and carried over into their retirement age. In the latest US Census Bureau report, 44.4 percent of households led by people older than 65 are wallowing in debts.
1. Home Mortgage
Majority of senior debt is due to housing-related loans. American households with seniors register the largest upsurge in average mortgage debts within the 12-year period (2000 and 2012).
But this didn’t mean more seniors were able to purchase and own homes. The loans correspond to borrowing big using the unpaid houses, such as home equity loans, refinancing, extended mortgage terms and even cash loans against the home value. Among households headed by people 65 and older with incomes over $100,000, a quarter or 25 percent have mortgage liabilities.
2. Student Loans
American baby boomers or those around 67 to 70 years old today are in financial peril over student loans co-signed or co-borrowed for their children or grandchildren. About 2.2 million Americans aged 60 and above have co-signed private student loans for their children. And with the increase in default loan payments due to hard times, they ended up responsible for these debts that their children were unable to pay.
Despite this, senior borrowers for student loans are not on the decline. Borrowers 60 and older remain the fastest-growing age group for student loans, which tripled since 2005.