Rising debt plaguing seniors’ Golden Years
Hanah Cho | 6/13/2012, 9:39 a.m.
BALTIMORE — Norman Harvel is growing old under a mountain of debt.
At 60, Harvel faces medical and credit card bills topping $80,000. Yet he is unable to work, having been injured at a job site more a decade ago. The former building maintenance worker now lives on $904 a month in Social Security disability benefits.
“I was so sick and tired of getting the bills, so I would throw them away,” Harvel said from his tiny basement apartment in Dundalk. “I’ve had to try to tell myself that it’s something I will wake up from.”
In Maryland and across the country, boomers and other older Americans are drowning in debt, say credit counselors, elder law attorneys and economists. A growing number of older people are seeking financial assistance and help finding work, as well as filing for bankruptcy, say those who work with seniors.
Double debt tarnishes Golden Years
“It’s supposed to be the golden years, but it’s not, at least financially,” said Nicholas Del Pizzo III, a Dundalk attorney whose clients include many financially struggling seniors seeking bankruptcy help.
From 1992 to 2007, the percentage of households of people in their mid-50s and older with housing and consumer debt rose from 53.8 percent to 63 percent, according to the Washington-based Employee Benefit Research Institute’s (EBRI) research using government data. The problem is even more acute for those 55 to 64, with 81.7 percent carrying debt.
Over the same period, the average overall debt for these 55-and-older households more than doubled, to $70,370, according to EBRI.
In Harvel’s case, he piled up debt over years of taking care of his sick wife, Loretta, who died in 2009 at 68. She had diabetes, was on dialysis and required two open-heart surgeries, Harvel said.
Health care bills are a leading factor contributing to the indebtedness of graying Americans.
Workers are paying more for employer-sponsored health insurance, while costs for medical care are skyrocketing. Eligibility for Medicare doesn’t begin until age 65, and it does not cover such expenses as hearing aids, dental care and long-term nursing care.
Meanwhile, older homeowners are carrying mortgage debt into retirement. Making matters worse, declining housing values have cut into what had been a safety net for older Americans and retirees: their homes.
Some older consumers also are saddled with credit card debt. Among Americans 65 and older, for instance, the average amount of credit card debt rose to $10,235 in 2008 from $8,138 three years earlier, the largest percentage increase among all age groups, according to a survey by Demos, a New York-based public policy institute.
Moreover, other older Americans are haunted by student loans years after they, or their children, left school. Adults 50 and older owe 17 percent of the nation’s $870 billion in student-loan debt, according to a March report by the Federal Reserve Bank of New York.
Perfect financial storm
The financial crisis also depleted savings and retirement accounts, contributing to a “perfect storm” of precarious finances among older Americans, said Marceline White, executive director of Maryland Consumer Rights Coalition.