George Kamel, a financial expert at Ramsey Solutions, has become heavier for Americans working at past retirement ages and has been offering advice to investors.
A new AARP survey shows that almost half of Americans over 50 with credit card debt use credit cards to cover basic living expenses, increasing debt balances.
AARP found that 47% of adults over the age of 50 carry credit card debts, 47% use credit cards to pay basic living expenses, including food, housing, utilities, healthcare and unexpected financial needs. Of those with credit card balances, 17% used their credit card each month for these expenses last year.
Of the elderly Americans with credit card debt, 37% said they had more credit card debt than a year ago. Almost half, or 48%, said they have a monthly credit card balance of more than $5,000, while 28% has a balance of at least $10,000.
“If you look at kids ages 50-64, if you're a group that's potentially on the runway ramp for retirement, this is a group that is particularly sensitive to the impact of credit card debt.”
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Older Americans with credit card debt are leaning towards crediting daily expenses, AARP found. (istock / istock)
“There is concern that they have close proximity and vision for the possibility of resignation,” Venkat explained. “They have to make tough choices – they have to choose between paying off their credit card debt or saving for retirement and securing their retirement. But it does not ease any seniors or retired people, and many with bonds.
AARP survey shows that 26% of adults over 50 who have credit card debt are extremely worried about how long it will take to pay off their debts, and expect it to take more than five years.
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More than a quarter of older Americans who have credit card debt are worried about how long it will take. (istock / istock)
Top drivers of credit card debt included daily expenses such as food, housing, utilities, vehicle costs and healthcare. Half of respondents in the more than 50 cohort with credit card liabilities said healthcare costs contributed to their debt. Among the group, the largest cost categories were dental expenses (46%), prescription drugs (35%), and visual care (19%).
When it comes to spending credit cards, Venkat said “there are many elderly people who have no choice.” “If it's the issue of putting food on the table, they really have a limited number of options for that.”
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Elderly Americans used credit cards for daily expenses, including housing, food, utilities, healthcare and other unexpected expenses. (istock / istock)
Almost half of the respondents over 50 adults with credit card debt, or 46%, or 46%, said their debt is eroding their ability to save for the future.
“That being said, what I think is happening, especially for those on the retirement runway, is that they have made tough choices,” she explained. “Do they cut their credit card debt or are they paying for retirement security? And the decisions they are making, based on the level of knowledge they have, especially in light of the rising interest card costs they are incurring.”
“AARP, what we're doing is to make sure they're notified and to make sure they have access to the different approaches they can use to deal with credit card debt,” she said of AARP's personal finance resources.
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These resources provide tools such as financial calculators, including those that focus on repaying credit card debt, as well as tips on questions to ask your financial advisors, strategies to pay off your debts, and more.
“It's a function of who you are and your personal situation, but the important thing we keep repeating is to start now and start today. Intentionally plan how you will defeat and deal with your debt.
