Like the every other demographic, many older Americans are struggling with financial challenges. High costs of medication, healthcare, and concerns about the need for possible long-term skilled care often weigh on the minds of those in their fifties, sixties, seventies, and beyond. Retirees often struggle more with comparable financial issues than their younger counterparts, because their ability to increase their income to account for problems is limited.
In fact, a new report issued by the AARP (view here) actually found that one money hurdle–credit card debt–affects seniors more than anyone else.
Consumer Survey & Seniors
These findings were shared by the AARP in conjunction with a group known as Demos as part of that group’s “2012 National Survey of Credit Card Debt of Low- and Midddle- Income Households.” The results of the survey paint a somewhat surprising picture of this form of consumer debt, and suggest challenges that must be addressed for the future.
Most notably, the survey found that middle income Americans age 50 and older had more credit card debt than their younger counterparts. This is a surprising finding, especially considering that excessive credit card debt is often assumed to be a burden affecting those who are younger, less financially secure, and in need of quick funds for basic needs (often related to raising children). In fact, only 4 years ago, the figures were completely reversed from what they are now, with the survey finding that younger Americans were indeed more burdened by credit card debt.
More specifically, the 2012 survey found that, on average, low and middle income Americans over fifty had roughly $8,300 of credit card debt compared with an average of only $6,300 for those under fifty. These numbers were reversed in 2008.
What is the cause of the reversal?
Because this is only a survey, it is impossible to make any conclusive statements about causation. However, a few other details uncovered in the data might prove clues as to why seniors are struggling more with finances now than in even the recent past. For one thing, nearly half of all respondents over fifty admit that part of their debt is for medical expenses. Prescription medication bills and dental costs actually topped the list. This makes sense, as certain drugs and dental benefits may not be part of insurance coverage in some cases.
Sadly, nearly 25 percent of respondents in the older age group also admitted that they dipped into retirement funds in order to pay down the debt. If that practice is widespread, it is troubling for those concerned with long-term stability for seniors in retirement–particularly considering public support for these seniors will be stretch in coming years due to demographic trends.