Pacific Views

Remember: We'll all be old someday.

Seniors in the US increasingly find themselves in thrall to credit card debt, with the total debt for this age group increasing by 89 percent between the years 1992 and 2001. That's the overall finding of a study done by the public policy think tank Demos.

As the press release for the study shows, the Demos findings aren't going to make anyone look forward optimistically to their financial situation later in life:

The report’s findings put into stark relief the trouble ordinary older Americans are having at making ends meet in this economy. Over the last two decades, retirement wealth (pensions and social security) has fallen for all but the wealthiest seniors. Also, the value of savings-based sources of income – savings accounts, CDs and other conservative investments favored by seniors
– has steadily declined. By 2001, more than one-third of seniors were depending on Social Security for over 90% of their income.

Tamara Draut, co-author of the report and Director of the Economic Opportunity Program at Demos, explained: "As older Americans face shrinking income and savings, just one unexpected expense – an illness, hospitalization, or even a repair to an aging home – can start a vicious cycle of debt. Seniors are turning in droves to credit cards as a safety net, but high interest rates and fees are trapping many into a nearly inescapable web of debt."

Some specific findings from the report include:

Among seniors [ages 65 and older] with incomes under $50,000 (70 percent of seniors), about one in five families with credit card debt is in debt hardship — spending over 40 percent of their income on debt payments, including mortgage debt. [...]

The credit card debt of middle- to low-income transitioner families [ages 55 to 64] without health insurance increased by 169 percent, as opposed to by only 37 percent for like-income families with health insurance.

Lest you think that medical expenses were less significant for seniors than for the transitioner age group, Demos says that their data suggests that medical expenses are generating a significant portion of seniors' increased credit card debt. (But remember: a single-payer or government-run health care system would be communism!)

You can download the Demos report on senior debt as a PDF file if you go here.