The burden of excessive credit card debt is a “new neighborhood” for thousands of senior citizens across the U.S. Low to middle income citizens are affected most, but even the upper middle class is taking on new debt.
Those who expected to spend their retirement years traveling and enjoying the fruits of their labors are now faced with a new reality. Those investments they made that were supposed to pay high dividends and allow them a comfortable lifestyle have tanked.
For some, it means a step downward in lifestyle in place of that luxurious retirement. For others it means going back into the workforce, if they can find a job. For others it means creating a form of self employment to subsidize Social Security income.
And for those with no place to turn to cut expenses or produce more income, it means growing credit card debt.
Those on a low fixed income have, of course, been hardest hit. When gasoline prices escalated and drove the price of all consumer goods into the stratosphere, those Social Security checks didn’t increase to meet the costs of every day necessities – such as food and heating fuel, which have seen the most dramatic increases in price.
Social Security Cost of Living Increases are based on the Consumer Price Index, and that index includes such items as housing, which has come down in value; and travel and recreation, which have seen drastic cuts in response to a drop in consumer spending.
Now gasoline prices have eased off a bit, but it is no surprise to anyone that food prices have not dropped. It may cost less than it did last year to ship merchandise to grocery stores, but no one is passing that savings back to the consumers.
Senior citizens are not turning to credit cards for luxuries. Instead they’re turning to credit cards for necessities. Medical care and prescription drugs top the list in spite of Medicare payments and other insurance policies. Over half the families surveyed said that medical expenses contributed to their credit card debt.
Is it any wonder? When a person brings in $600 per month and their medical bills eat up a third of it, something has to give. For many, it means putting groceries on a credit card.
From 2005 to 2008, citizens 65 and older increased their credit card debt by 26%. By comparison, consumers in the 35 to 64 age categories increased debt by 7% and consumers 18-34 increased by only 1%.
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