Old, And In Debt

One of the most basic rules of retirement planning is that retirees should be debt free.  The idea, of course, is that when you are living on a fixed income, you don’t want a significant portion of that fixed income to go to paying old debt — and paying interest on that old debt.

4-tips-to-manage-your-debt-1600x700Increasingly, however, older Americans are breaking that very basic rule.  It’s part of a growing and worrying trend of accumulating credit card debt, and delinquency, by Americans.

According to the Federal Reserve Board, at the end of 2018 Americans had amassed $870 billion in credit card debt, which is a new record.  That debt was created on more than 480 million credit cards in circulation.  Credit card debt is the fourth largest form of consumer debt, trailing mortgage, student loan, and auto debt, but is the fastest growing category of debt.

And what is especially concerning is that older Americans are holding more credit card debt than ever.   The New York Federal Reserve Bank says 18 percent of all credit card debt is held by people between 60 and 69, and an additional 12 percent is held by people over 70.  Even worse, according to the American Banker article linked above, “by age group, older Americans are seeing their credit card debt transition into the delinquency category at an increasing pace. In particular, those in their 50s have seen the most rapid change and could be considered the most vulnerable should a change occur in their employment.”

Americans already aren’t all that great at saving for their retirements.  If people are heading into the “Golden Years” saddled with lots of old credit card debt, it’s just going to make the problem worse.  When Grandma and Grandpa need to use the Social Security checks to pay off their credit cards, they’re not going to have much of a retirement — or even any retirement at all.

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