Debt for people 60+ has doubled in past decade

The National Council on Aging examined the debt levels of households headed by adults 60 or older. Among the findings:

• The median total debt of a senior household more than doubled from $18,385 in 2001 to $40,900 in 2013.

• About one in 25 older households had a negative net worth — liabilities surpassed assets — in 2013, compared with fewer than one in 50 in 2001.

• One-third of senior homeowners owed money on a mortgage or home-equity line of credit; 30 percent owed payments exceeding a quarter of their income.

• More senior households carry credit-card debt, and more of it. In 2001, 27 percent had credit-card balances. By 2013, 32 percent did. The median balance increased from $1,274 to $2,450, and one in four owed at least $7,200.

• The share of older households taking payday cash-advance loans increased fourfold, from 0.5 percent in 2007 to 2.2 percent in 2013.

Americans 60 and older are carrying debt loads more than twice the size they were a decade ago, bogged down primarily by growing medical debt incurred to treat age-related illness.

That’s according to a recent survey from the National Council on Aging, which found the median total debt for senior-led households in 2013 was $40,900, up from $18,385 in 2001.

At the same time, the number of senior households with debt increased from about 50 percent of all households in 1989 to just over 61 percent in 2013.

Chronic illness affected about 84 percent of people 65 and over having financial problems, according to the survey, which may lead many seniors to make trade-offs to save money.

Among aging agency professionals surveyed by NCOA:

“If you can’t afford to eat nutritious foods and take your medications, what happens to people is that it puts their lives at risk, and that’s the most serious outcome imaginable,” said Kathy Keller, a spokeswoman for AARP Ohio. “For people who have pre-existing conditions like diabetes or heart disease, it puts them at way higher risk of having these terrible outcomes.”

The aftermath of the Great Recession and the foreclosure crisis, which hit Ohio especially hard, has contributed heavily to the indebtedness of seniors living in the state, according to Lori Trawinski, a financial planner and policy adviser for AARP’s Public Policy Institute.

Many older Ohioans who have traditionally relied on home equity to cover health care, home repairs, and other big-ticket items, no longer have those resources to rely on as a result of foreclosure or declining home values that have left them owing more on their mortgages than their homes are worth, Trawinski said.

“A steadily growing number of homeowners have been carrying mortgage debt well into their retirement years,” she said. “I don’t think people are making a conscious decision to carry debt. People have no choice.”

One-third of senior homeowners owed money on a mortgage or home-equity line of credit, and 30 percent owed housing payments exceeding a quarter of their income, according to the NCOA report.

Exacerbating the problem is that more seniors are turning to high-interest credit cards, even payday lenders to help pay off debt, creating a cycle of debt that simply adds to their financial woes.

According to NCOA, 27 percent of seniors had credit-card balances in 2001. By 2013, 32 percent did. The median balance increased from $1,274 to $2,450, and one in four owed at least $7,200. Meanwhile, the share of older households taking payday cash-advance loans increased fourfold, from 0.5 percent in 2007 to 2.2 percent in 2013.

Many seniors may feel they have no other choice because they have few other resources to rely on.

According to GAO’s analysis of the 2013 Survey of Consumer Finances, 41 percent of households age 55-64 have no retirement savings or defined benefit pension to supplement their incomes.

Social Security provides most of the income for about half of Ohio households age 65 and older, but the average Social Security benefit for an Ohio retiree is only about $1,100 a month — well below poverty level.