Nearly half of all seniors carry credit card debt, a burden made even heavier by rising inflation. For older adults living on fixed incomes, managing daily expenses has become increasingly challenging. While some may assume that seniors don’t need to worry about debt, aging does not automatically grant debt forgiveness.
Why do seniors go into debt?
Most older people live on a fixed income, money that comes from Social Security, pensions, retirement accounts, and other sources. These funds cannot be garnished (seized to settle unpaid debts). But financial hardship can occur for numerous reasons, leaving the elderly in financial straits. Aging individuals rely on their credit cards to pay for basic living expenses, such as housing, utilities, and food. Large medical expenses caused by unforeseen health issues also send the elderly scrambling for their credit cards to cover health care costs.
According to the National Council on Aging, inflation causes older people to overspend their annual income by $4,000. The average amount of credit card debt held by seniors is around $2,800. Even more concerning is that the number of aging adults who accumulate credit card debt is increasing. Interest rates are on the rise, too, as the Federal Reserve increases them to fight inflation. As a result, using a credit card is expensive, and paying down these balances is difficult. For seniors whose monthly expenses are continually higher than their income, it’s a hopeless cycle.
Can seniors stop paying credit card debt?
Contrary to popular belief, the elderly should keep tabs on this form of debt. It’s a fallacy that seniors don’t need to be concerned about their mounting credit card debt. There is no way for older people to simply stop paying their credit card debt without facing the financial repercussions.
How do seniors manage or eliminate credit card debt?
Seniors with credit card debt are not alone. Firstly, they need to understand that carrying high credit card debt is not a character flaw. Most older people charge their cards out of necessity rather than whip them out to make frivolous purchases.
1. See the Full Picture
Understand the full extent of the debt. Calculate the total amount of debt across all credit cards. Review the interest rates on each card. Paying off the card with the highest interest rate is advisable to save money, a strategy known as the debt avalanche method.
Review income and expenses. Seniors’ income may come from a variety of sources, such as a pension, investments, or Social Security. Identify monthly expenses, categorizing expenses that are essential (food, housing, utilities) versus those that are non-essential (vacations, the latest tech).
2. Reach Out to Creditors
Once the big financial picture is clearer, set out to get the debt under control. Contact the creditors to explain the financial hardship. By having an idea of where their money is going, seniors can communicate how much they are able to afford to pay back each month.
Ask the creditor if they offer a forbearance program, which is a temporary relief from debt payments when the credit card holder experiences financial hardship. For a specific period, the creditor may agree to waive late fees or lower monthly payments.
3. Work with Credit Counselors
Seniors might also consider working with a certified credit counselor. This financial professional works with the elderly individual to understand how much they can pay back monthly, then develops a debt management plan to consolidate credit card debt into one monthly payment.
They also accept seniors’ monthly payments and distribute them to creditors. Credit counseling services are intended for seniors who have trouble paying off debts on multiple credit cards. It’s an ideal program for older adults who want to shorten the time of their debt payments.
While it’s beneficial for the elderly to learn financial management strategies from credit counselors, it’s advisable to do diligent research. Scammers are abundant and ready to prey on seniors drowning in debt. Choose a nonprofit credit counseling agency rated highly by the Better Business Bureau.
4. Separate Debts
Seniors should also differentiate between credit card debt and medical debt. Healthcare providers may be willing to forgive medical debt when the healthcare services are charged to a credit card. Medical professionals may alternatively offer options for financial assistance.
5. Exercise Power of Attorney
Family members should exercise the power of attorney when their aging loved one suffers from cognitive issues that lead to uncontrolled credit card debt. Via this legal document, an appointed family member has the authority to manage the senior’s financial affairs.
6. Create a Budget
Once senior pays back their creditors, it’s critical that they do not rack up further debt. Learn how to set up a budget and stick to it. A budget may include living on no more than 70 percent of income and saving 30 percent of it, for example.
Older adults living on a fixed income should learn to take control of their money. Financial professionals and family can provide a wealth of support. Assisting Hands Home Care is also prepared to deliver compassionate senior care in the comfort of their home.
Elderly Home Care from Assisting Hands
Our reputable home care agency fulfills the daily non-medical care needs of elderly care recipients. Professional caregivers are tasked with duties such as grocery shopping and healthy meal preparation. We also give timely medication reminders to keep seniors on top of their health.
If your aging loved one needs reliable transportation to the credit counseling office, we provide it. We also drive seniors to the doctor’s office and pharmacy. Our companionship is vital. Caregivers engage socially with the elderly through conversations, outings, hobbies, and recreational activities.
In-home care options include Alzheimer’s and dementia care, respite care, and 24-hour care, among others. Our caregivers are licensed, bonded, and insured to give seniors and their families maximum peace of mind. Plus, care plans are flexible and can be updated to meet changing care needs.
When the senior in your life plans to age in place, Assisting Hands Home Care can make their wish a reality. We are privileged to serve seniors in Chicago, IL, including the neighborhoods of Lakeview, Irving Park, Edgewater, and Portage Park. Schedule a free in-home consultation today to learn more about quality senior home care near you.
