Senior Financial Insecurity: More Exploit Credit Cards for Bills

With constant news about inflation, rising interest rates, and discussions about whether America is headed for a recession, many older individuals are wondering whether they will be okay financially.

The question is valid. Many individuals develop senior financial insecurity as they age. That’s because economic concerns have put a damper on retirement and living a carefree life in the golden years, for over 15 million older adults (ages 65 and up).

The term “economically insecure” is defined as incomes at or below 200 percent of the federal poverty.

Another grim statistic is that 80 percent of households with older adults either cannot afford their basic and long-term needs today or at risk of not being able to do so in the future. That’s the very definition of senior financial insecurity, and it is an alarming trend.

The reasons for senior financial security are hard to hear but easy to understand.

Leading Reasons for Senior Financial Insecurity:

• Rising housing costs
• Increasing health care costs
• Social Security benefits are not enough to live on
• Lack of access to transportation
• Poor access to food
• Dwindling savings (or no real savings at all)
• No way to bring in extra income
• Carrying too much debt, especially credit card debit

The percentage of households led by someone aged 65-75 with credit card debit has jumped to 41 percent in 2019, according to Forbes, and current figures are expected to be greater.  

That increase is supported in part by a different study which says retirees are outspending their annual incomes by more than $4,000 a year, which is why some have resorted to using credit cards.

Credit card debt isn’t reserved for older Americans. Latest studies show the country’s credit card debt reaching the $1 trillion mark, which rightfully has people worried. This is no longer senior financial insecurity, but American financial insecurity.

According to the Federal Reserve Bank’s recent data, Americans are holding a record amount of credit card debt, which is about $986 billion as reported in May 2023. That’s an alarming 17 percent jump compared to one year ago.

With increased interest rates as well, paying off credit card debt and getting out of the debt cycle can be even more of a challenge.

This site isn’t intended to offer debt counseling or retirement planning beyond generalities, but it would be fair to say efforts should be made to eliminate increasing debt or living beyond what is in a budget. After all, nobody wants to retire, only to have the remainder of their lives filled with senior financial insecurity.

Credit cards can provide short term relief, but overall add to the feeling and anxiety of having senior financial insecurity.

There are many avenues for seeking advice to avoid senior financial insecurity, including free debt counseling and retirement planning.

If you have already retired and are struggling financially or think you might, get some advice now so that you can manage your money as well as possible and protect yourself later in life.

The non-profit National Council on Aging offers a free Planner that can also get you started, for example.

If you haven’t yet retired, there are certainly numerous checks and balances for you to take before you make a final decision. You want to be sure you can live comfortably and avoid senior financial insecurity.

Pre-Retirement Planning and Senior Financial Insecurity

We are in our 60s, and have not yet retired. Quite frankly, statistics like those above are reasons why we haven’t yet made final decisions.

While, admittedly, it’s getting more difficult to maintain a full-time work life balance when retirement beckons, we keep hesitating. If there was a “perfect” date/age/time to retire, we’d be posting it everywhere!

If you are like us, and haven’t yet retired, some heavy-duty financial planning is in order before saying “I’m outta here” with your workplace.

Lifestyle expectations, activities, travel, health, and transportation as well as where to live all factor into the equation.

Not surprisingly, senior financial insecurity that could keep us from living our “golden years” the way we want, is a big reason for delaying our decision.

While some expenses can’t be prevented, trying to pay off or carefully plan and budget for expenses such as mortgage and transportation costs (like an auto loan) can go a long way.

 A Federal Reserve takeaway is that over the past 30 years, older Americans became more likely to take out an auto loan and tended to borrow more.

Having a newer car that better meets your lifestyle may be a good idea, as long as you can afford it.  But weighing pros and cons to the purchase is important before signing that loan.

Long after the appeal of a new car is diminished, there are still monthly payments to make. And that can lead some idividuals down the path of senior financial insecurity.

Preparing for retirement can be made easier by three things:

• Pay off large debts as much as possible.
• Build up retirement savings.
• Have an emergency fund.

These three areas can serve as motivation and make you more confident and be retirement ready. Avoiding impulsive purchase and overspending your budget can make individuals develop senior financial insecurity.

So, keep these points in mind so that you are financial healthy when you make that final decision to retire!