Elderly more likely to face debt management problems

10.21.09
By Timothy Jones

A recent report finds that among all the people having debt management problems in the current economy, senior citizens are increasingly likely to owe money to creditors.

According to the Employee Benefit Research Institute, the percentage of American families headed by someone over the age of 55 with various levels of debt increased to 63 percent in 2007, up from about 60 percent in 2004. In 1992 that figure was closer to 53 percent, indicating an upward progression in debt levels for older Americans.

The report notes that this is problematic for many Americans because they are now more likely to be facing debt just as they are getting ready for their retirement years. The recession has also seen considerable damage inflicted on 401(k) accounts and other savings, making retirement a more uncertain prospect for millions of people.

While the percentage of older people dealing with debt has risen steadily in recent years, the amount of debt they are facing has also increased.

The report found that the average debt level for American families headed by a person over age 55 now stands at $70,370, more than double the $32,191 that was recorded in 1992. The trend in housing-related debt is seen as a particular concern for older Americans because this can cost them their nest egg to help finance an adequate standard of living during their retirement years.

Looking ahead, it will be important to see if this trend holds steady as the economy begins its expected recovery. The Dow Jones Industrial Average recently returned to the 10,000 level, providing further good news for investors and most people with retirement accounts.

The trend of recent months has also seen people making dramatic progress on debt management by paying down credit balances and things like auto loans, which could provide a further boost to people as their retirement years approach.

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Debt has been an increasingly troublesome problem for older Americans.