Americans over the age of 60 owe $43 billion in student loan debt in addition to an average of $5,347 in credit card debt. These obligations may make planning for retirement difficult. However, there are ways that older Americans can find help dealing with their debt. For those who have taken out student loans to pay for their child’s education, it may be possible to ask those children to assume more of that obligation.
To reduce an individual’s dependence on credit cards, it may be a good idea to downsize when possible. Downsizing could mean getting rid of cable television, getting rid of an extra vehicle or anything else that will free up cash each month. Creating a cash management plan can help an individual look at his or her finances to determine where cuts may be made.
In some cases, debt may make it impossible to retire on time. Those who are still trying to pay down credit cards or a mortgage may need to keep working and use their income to pay down those debts or to accrue a larger retirement nest egg. Experts advise those looking to raid their existing retirement account to avoid doing so due to the tax consequences and potential loss of future growth.
For those struggling with debt, bankruptcy may be the answer. Older people looking to downsize may not be as concerned with the credit hit that they may take in the short-term. However, it may be best to consult with a bankruptcy attorney prior to making this decision. Such an attorney can outline the eligibility and other requirements of Chapter 7 and Chapter 13 as well as discuss other forms of debt relief that may be available.
Source: FOX Business, “Boomer Retirees Need a Hand Paying Down Debt“, Casey Dowd, October 09, 2014