Senior Finance: How Seniors Can Avoid The Stress Of Living With Debt

pensiveseniorlargeAccording to recent Federal Reserve data collected by the Employee Benefit Research Institute, many seniors are in serious financial trouble and are struggling with mounting debt. The debt load of senior citizens has soared in recent years – up an amazing 83% since 2001. Today, according to an article by CNN Money, seniors have over $50,000 in debt on average.

This is definitely not the dream of retirement that many seniors expected.

The reasons as to why senior debt has soared over the past decade are complex, but much of this debt is related to an increase in housing related debt as the housing market has crashed, and health care debt.  And unfortunately, senior debt is even a bigger problem than for those who have substantial debt but are are young, because many seniors cannot afford to pay back debts after they have retired from a full-time job. Thankfully, there are solutions available to seniors who are having trouble paying back the money they owe.

Senior Debt Solutions

Seniors who are unable to pay back the money they owe can visit a debt counselor to find out more about the options that are available to them. Professional debt counselors contact their client’s debtors to set up an affordable monthly payment plan. This can take the pressure off seniors, but it can also lower their credit rating. But seniors who are dealing with financial problems likely want to improve their situation even if it affects their credit score.

However, seniors also need to be careful and make sure that the debt counselors they are consulting are reputable and not looking to profit from them. To start, make sure that you consult with a non-profit counseling service, and preferably one geared toward working primarily with seniors.

There are additional steps that seniors can take to improve their financial situation if they find themselves facing a considerable amount of debt. The first is creating a detailed financial plan that includes all earnings and expenditures. People should keep all of their receipts so they can add up what they spend each month. Seniors should write down what they spend each month on food, medicine, utilities, transportation, entertainment, etc. In most cases, people can spot ways that they can lower their monthly expenses. In order to pay creditors and get out of debt seniors may have to stop buying meals at restaurants or give up certain activities.

Seniors who want to get out of debt can contact their creditors on their own and ask for their account to be frozen. In some cases, credit companies will stop the interest on a loan if the customer agrees to make scheduled monthly payments. Once the payments are made and the debt is eliminated the person can choose to keep the account closed or reinstate it.

Creditors are often willing to do this because they still make a profit. If they need to sell a customer’s debt to a collection agency because they are not receiving payments they will not recover the money owed to them including the interest charges. Seniors should call creditors on their own before they decide to meet with a credit counselor because if they are successful in freezing their accounts it will not damage their credit any further.

In order for seniors to sort out their debts, they need to make wise financial decisions. Sometimes these decisions will need to be made in collaboration with a reputable credit counseling service and also family members. However, not all debt will be easily eliminated through simple financial planning. Mounting medical bills, for example, are often out of individual control. However, even in these situations, actions can be taken to eliminate or reduce the impact this debt has on a person’s life. Seniors should not have to live with the constant stress of financial debt they cannot afford, and seeking financial help will help them learn more about their options.

About Susan Day

Susan Day is a mother to two beautiful daughters and a grandmother to one adorable five year old boy. She is determined to live an active, happy life well beyond here current 70 years of age!