Credit Counseling for Seniors

    Credit counseling can give seniors citizens in debt an overview of their finances, and provide actionable recommendations to help them become debt free.

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    A senior citizen receiving credit counseling for credit card debtWe are never too old to learn a thing or two about how to manage our finances. In fact, the older we get, the more important it is that we develop healthy and sound financial practices.

    Over 25 million Americans over the age of 60 are economically insecure, meaning they live at or below 250% of the federal poverty level. In other words, these seniors are trying to get by on $29,425 or less a year, which is well shy of the $46,000 the Bureau of Labor Statistics (BLS) cites as the average expenditures for retirees.

    This means that millions of seniors are falling deeper into debt at a time when they should be enjoying the fruits of their long years of labor.

    Credit counseling can help seniors manage their debts by mapping out a plan for financial stability and long-term success.

    Why Do Senior Citizens Often Struggle Financially?

    Most Americans dream of one day retiring and finally pursuing a passion, like writing a book, dabbling in art or just plain relaxing in the Florida sun. But beach condos are expensive, art seldom pays the bills and even writers have to eat. You are no longer working, but you still need money for housing, food, medical bills, etc. That’s why you have a retirement account.

    Pensions, 401(k)s, IRAs and Social Security all make up the nest egg which you draw from when you are no longer in the workforce.

    However, not everybody can count on such a variety of income streams. Only about 33%of Americans have a 401(k) and nearly half have no retirement account to speak of.

    This means a lot of seniors have to rely on Social Security and whatever money they’ve managed to stash away over the years which, usually, isn’t much. Nearly a quarter of Americans have less than $5,000 saved for retirement, and 15% have nothing at all.

    Social Security can only cover so much and unless you are accustomed to a low standard of living you will need another source of income to supplement your monthly SS checks. The average Social Security benefit in 2019 is $1,461 a month, or $17,532 a year.

    Most senior citizens struggle with debt even after retirement. About one-third of senior households finds themselves broke or in debt after meeting essential, monthly expenses, like food, housing and medical bills.

    If dealing with debt was a headache when you were earning money, it can only grow into an even greater burden once you are stuck on a fixed income.

    Everybody has to prioritize housing, transportation and food, but as we climb in age, medical expenses for seniors climb higher and higher atop our list of priorities.

    According to the Bureau of Labor Statistics, Medical expenses account for 12% of the budget for seniors over 65. A decade later, those expenses will jump to 15% of your budget, making them your second greatest expense after housing.

    How Can Credit Counseling Benefit the Elderly?

    Credit counseling will give seniors a bird’s eye view of their finances. A nonprofit credit counseling agency can help you consolidate your various revenue streams or help you find new ones to bolster your budget.

    You don’t even have to leave the couch to get help; credit counseling sessions can be completed online or over the phone.

    Budgeting for Seniors:

    You may know in your gut you’re spending too much money on golf, but forming a budget with a nonprofit credit counseling agency will reveal just how much you’re spending on leisure activities compared to how much you should be spending on essentials like housing, healthcare and repaying debts.

    To get the most out of your money in retirement you have to learn how to live on a budget. In other words, learn how to manage and portion out your income for the things you really need.

    Here’s a breakdown of the greatest expenditures for seniors over the age of 65, according to the Bureau of Labor Statistics:
    • Housing – 32.4%
    • Transportation – 17.1%
    • Food – 12.9%
    • Healthcare – 12.2%

    The only thing that sticks out from what the younger population worries about is medical expenses, and, as stated above, those will only grow as you age.

    Retirement Debt:

    Debt is a growing threat to your retirement account. If ignored, it can wreak havoc on your credit score and make what should be the most laid-back years of your life very stressful.

    In 2016, the average debt in homes with a head-of-household above the age of 75 was $32,657.

    All that debt stems from unpaid medical bills, mortgages, credit cards and even student loans.

    Student loan borrowers in there 60's owe, on average, $33,800. According to the Wall Street Journal, total student loan debt rose 161% for people aged 60 and older from 2010 to 2017.

    There is no chance in outmaneuvering the Federal Government when it comes to repaying student loans, especially if you plan to rely on social security benefits in retirement.

    If you default on your federal student loans in retirement, the government will penalize you by cutting your social security benefit, sometimes by as much as 15%.

    This is why proper budgeting and repaying debts is an essential practice no matter what stage of life you are in.

    Whether it is bad budgeting or a lack of sufficient funds, credit counseling can help navigate you with personal solutions that will fit your needs.

    Alternatives to Help Seniors Manage Debts

    There are programs out there designed to help lift seniors out of debt. Some programs help pay for healthcare, like the Medicare savings program. Other assistance may come in the form of financial, nutritional or employment aid.

    It can be hard for seniors to find employment, especially if they are a few years removed from the workforce. However, more and more older Americans continue to clock into work even after reaching full retirement age and becoming eligible for Social Security and retirement benefits.

    According to a Pew Research Poll, 18.8% of seniors are working full or part-time. That’s a notable jump from 12.8% in 2000.

    Whether retirement has you restless or you just need the money, certain programs, like the Senior Community Service Employment Program (SCSEP), can help you find work by providing you with specialized training and job opportunities.

    One last thing: don’t be afraid to ask for help from family or friends. It may be a little embarrassing, but loved ones are often glad to help. However, they will rarely come prying into your financial matters uninvited. It’s best to acknowledge the severity of the situation early and reach out before things take a turn for the worse.

    And make use of nonprofit credit counseling agencies. The help they offer on budgeting and solving financial problems is free. If you’re struggling, talk to them.

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    Author

    Staff Writer

    Bents Dulcio graduated from Florida State University in 2016 with a degree in Political Science, and knows a thing or two about Millennial student loan debt. While in school, he developed a passion for classic literature, reading books by authors from Homer to Adam Smith and developed a penchant for dealing with tight financial circumstances. Bents used the student loan money to pursue a semester of language study in France that helped convince him to become a writer. Bents still hits the books – he read 70 in the past year – and still knows how to cut corners financially.

    Sources

    1. Foster, Ann. (2016, March) A closer look at spending patterns of older Americans. Retrieved from: https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm
    2. NA. (2016 December) SOCIAL SECURITY OFFSETS. Retrieved from: https://www.gao.gov/assets/690/681722.pdf
    3. Desilver, D. (2016, June 20) More older Americans are working, and working more, than they used to. Retrieved from: https://www.pewresearch.org/fact-tank/2016/06/20/more-older-americans-are-working-and-working-more-than-they-used-to/
    4. Span, P. (2016, August 1) Of Retirement Age, but Remaining in the Work force. Retrieved from: https://www.nytimes.com/2016/08/02/health/retirement-working-longer.html
    5. Andriotis, A. (2019, February 2) Over 60, and Crushed by Student Loan Debt. Retrieved from: https://www.wsj.com/articles/over-60-and-crushed-by-student-loan-debt-11549083631
    6. Stevermen, B. (2019, March 26) Half of Older Americans Have Nothing in Retirement Savings. Retrieved from: https://www.bloomberg.com/news/articles/2019-03-26/almost-half-of-older-americans-have-zero-in-retirement-savings
    7. Backman, M. (2017, June 19) Does the Average American Have a 401(k)? Retrieved from: https://www.fool.com/retirement/2017/06/19/does-the-average-american-have-a-401k.aspx
    8. Kopf, D, Cheng, M. (2019, June 3) The number of Americans working in their 70s is skyrocketing. Retrieved from: https://qz.com/work/1632602/the-number-of-americans-working-in-their-70s-is-skyrocketing/
    9. NA. (2019) Planning & Progress Study 2019. Retrieved from: https://news.northwesternmutual.com/planning-and-progress-2019
    10. NA. (2016, December) FACT SHEET. Retrieved from: https://www.ncoa.org/wp-content/uploads/NCOA-Economic-Security.pdf
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