National nonprofit credit counseling agency provides seniors with
savvy tips for tackling debt
PHOENIX–(BUSINESS WIRE)–For many Americans, the Golden Years are anything but. Increasing debt
among seniors, disappearing pension plans and the uncertainty of Social
Security are causing tension and stress.
According to the Institute on Assets and Social Policy, one third of
senior households have no money left over or are in debt after paying
their basic expenses each month. Moreover, the Federal Reserve Board
reported that in 2013, 61.3 percent of households headed by an adult 60+
carried debt; of those households, debt averaged $40,900. Seniors are
even grappling with student debt: the U.S. Government Accountability
Office says that 706,000 senior households held a record $18.2 billion
in student loans in 2013.
“Living on a fixed income while paying off debt can be a real hardship
for older adults,” said Mike Sullivan, a financial expert with Take
Charge America, a national
nonprofit credit counseling and debt management agency. “Even so,
there are smart ways they can tackle their debt before and even during
retirement to restore their financial wellbeing and peace of mind.”
Sullivan offers seniors five tips for paying off debt:
Start with bad debt: People nearing retirement should first
focus on bad debt such as car loans and credit cards, paying down
high-interest loans while making minimum payments on other debts. Once
one debt is paid, they can move onto the next until all balances are
Downsize: Rising home prices have resulted in longer-term
mortgages, which means many people are still paying off home loans
when they reach retirement. Though it’s an emotional topic for many,
downsizing to a less expensive home is worth considering – especially
for seniors with sizable mortgages or other debt.
Pay off mortgage loans: Whether or not they choose to downsize,
seniors who pay off their mortgages will have a large increase in
disposable dollars – money that can pay off other debts or fund
retirement savings. This option is best for seniors with cash
reserves, and only after other high-interest debt has been paid. It
may also make sense for seniors to refinance their mortgage loan to
secure a lower interest rate and take advantage of federal programs
Consider a reverse mortgage. Reverse mortgages aren’t right for
everyone, as they come with high fees, high interest rates, and must
be repaid when the owner dies or moves away. However, retirees with
equity in their homes who are struggling to make ends meet may
benefit, as it frees up cash that can be directed at other debts.
People considering a reverse mortgage should consult a HUD-approved
counselor for help.
Delay retirement: Many people of retirement age are in
excellent health and capable of working longer, allowing them to bring
in income, pay off debts and delay tapping their Social Security
benefits or other sources of retirement income. Seniors who carry deep
debt may want to postpone retirement for a few years.
For more financial tips, visit Take
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a nonprofit agency
offering financial education and counseling services including credit
counseling, debt management, student loan counseling, housing counseling
and bankruptcy counseling. It has helped more than 1.6 million consumers
nationwide manage their personal finances and debts. To learn more,
or call (888) 822-9193.
Andrea Aker, 602-339-7339