Debt

Do seniors get in debt? You better believe it. A woman, 88 years old, said she had a credit card balance of $25,000. How many cards was that? We’re also told that 54% of workers who took their pension in a lump sum in 2003 had spent it all by mid-2006.

We seniors could shrug this off easily by saying, So what! That’s their privilege (or problem) which of course is true although it could easily happen to anyone. Lump sums are tempters, no question about it. And living via plastic is also tempting. If we Max out on one card we can sign up for another. Often no questions asked. And the mailman often is the go-between. Admittedly, it could take a bit of doing to run up a 25k debt but it could happen.

So, what happens then? Credit card companies, banks and other institutions have been known to either reduce the amount, make the payments easier, lower the interest rate or even, in some instances, forgive the debt and debtor. Families and friends at times come to the rescue but don’t automatically count on it. Then what? Pick up where one left off and continue on a spending spree? That’s unlikely since no doubt restrictions were involved and credit reports could put the brakes on obtaining credit.

How about bankruptcy? Isn’t that an answer to this senior moment? Yes and no. If you conclude that this is the way to go, particularly if other avenues have not worked, bankrupt proceedings may be the answer. However, you better find out if you’re eligible. Then, you have to know about Chapter 7 and Chapter 13. You’ll probably want to hire a lawyer or you could try to do it yourself. If so, good luck. You also might have to get some counseling. If you own a home and have other assets such as 401(k), pension, life insurance and the like, you will have to check with your state laws to see what is protected. And then there will be costs, direct and hidden.

It would seem logical that seniors would be salty enough to avoid getting into debt, and many are. Experience is a good teacher, sometimes even a great teacher, but not always. Money management is not always taught in the University of Daily Living and may have to become a part of your senior lifestyle, by necessity or choice.

Unfortunately, this column is unable (or unwilling) to give advice beyond what is already given. However, since we are trying to unravel some of the entanglements of senior moments, a word to the wise is often sufficient: Stay out of debt.

But is this really a senior problem? Do enough seniors warrant a warning of this potential senior moment? You’ll have to be the judge of that. However, there is an deluge of baby-boomers standing on the threshold of retirement (some are already there). Are they great savers? Not really, nor are Americans generally good savers. Good spenders, yes. Savers, no. Will 401(k)s, pensions, Social Security and inheritances save the day?

For some, maybe. But not all. In the last few years, consumer debt for credit cars and auto loans has skyrocketed. Credit card debt for the typical household is several thousand dollars. And the savings rate in the second quarter of 2006 was the second lowest since the Depression. Really? That’s what the experts say.

Debt, a tiny, 4-letter word, is not in every seniors everyday vocabulary. Maybe it is time to dust off that concept and see if it could be one of those senior moments that could be an unfortunate experience if not recognized, or recognized in time.