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Tide Of Debt Is Rising For The Elderly
Chicago Tribune
July 8, 2004
NEW YORK -- America's seniors, who weathered the Great Depression or grew up in its shadow, have a reputation for frugality and saving. Of all generations, this was the one that got it right by pinching pennies, avoiding credit and putting money away for retirement and to pass on to their children.
Yet an increasing number of older Americans find themselves deep in credit card debt or filing for bankruptcy--troubles more associated with their Baby Boomer children and their grandchildren.
The reasons vary, but experts say some retirees are overwhelmed by rising medical expenses or find that Social Security and their pensions do not stretch far enough. Those who lost jobs before they were ready to retire never quite caught up.
Dollie Hawkins, an 84-year-old retiree in Miami, dates her financial problems to 1982, when the company she worked for went out of business and she lost her full-time nursing position. She said she looked long and hard for another permanent job but could only get short-term private duty work.
"You fill out applications and they tell you, `We don't need anyone now,"' she recalled. "It's not that. It's the age thing."
Hawkins, a widow, said that as bills "began to crowd up on me," she turned to credit cards and ran up $11,000 in debt. She's trying to pay it down, if slowly, from her Social Security benefit and meager savings.
"Sometimes, I wished I could have walked away from it, but I wasn't raised that way and I feel responsible," Hawkins said.
The rapidly rising cost of health care and medications is also clobbering some seniors.
Stuart D. Zimring, president of the National Academy of Elder Law Attorneys, said he is seeing more older couples who get into financial problems because "cash flow is not keeping pace with the cost of living, particularly the cost of health care."
Just how big a problem is elder debt?
A study by Harvard University's Consumer Bankruptcy Project found that the number of seniors filing for bankruptcy is still quite small. In 2001, just 82,207 bankruptcy petitioners, or 4.6 percent of the total, were 65 or older, the study found. Still, it was the fastest-growing group of petitioners.
A separate study by Demos, a New York-based think tank, found that seniors over age 65 were carrying an average of $4,041 in credit card debt in 2001, nearly double the amount reported 10 years earlier.
Tamara Draut, director of the economic opportunity program at Demos, blames "weakening of the three-legged stool" that elders are supposed to rely on: Social Security, pensions and private savings.
Seniors often find their Social Security income reduced when a spouse dies. Fewer workers get traditional pensions, and many retirees have seen companies cut back their pensions or health-care coverage. Savings, meanwhile, took a hit during the bear market on Wall Street in 2000-02 or weren't large enough to begin with.
Howard Dvorkin, president of Consolidated Credit Counseling Services Inc. in Ft. Lauderdale, said he sees a growing number of seniors with debt problems.
Some of those in trouble, he said, were lured into the stock market during the 1990s boom and lost most of their money in the bear market that followed. For others, the low interest rates of recent years meant their investments did not provide the income they expected.
"For a lot of them, it's an issue of pride," Dvorkin said. "They think, `I got myself into this and I'm going to get myself out of this.' They're fighting not to die in debt."
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