Three Things That Can Derail Your Retirement
The American Dream – work hard and retire comfortably at 65 - is more of a dream than a reality for most seniors. A new GAO analysis finds that among households with members aged 55 or older, nearly 29 percent have neither retirement savings nor a traditional pension plan. Baby boomers are the first generation in American history to be entering retirement saddled with debt.
Credit Card Debt: Thirty-seven percent of Americans have credit card debt greater than or equal to their emergency savings, so a steep medical bill, a car accident, or other unexpected expense could mean financial disaster. This is far more serious for seniors than for younger Americans. Credit cards are listed as the largest pitfall for senior citizens. Faced with rising health care costs, older people are often forced to use credit cards to make ends meet.
Mortgage Debt: Part of that American Dream is owning a home. However, the drop in property values and the worst recession since the 1930s have taken a toll on that too. Statistics show that 25 percent of households headed by people 65 and up with incomes over $100,000, still have mortgage liabilities.
The median mortgage held by Americans 65 and older has more than doubled since 2001 — to $88,000 from $43,400. A substantial number of older Americans are stuck with mortgages that exceed their home's value. This situation can absolutely derail the envisioned retirement plan.
Helping Children Financially
Nearly 60% of baby boomers provide financial support to adult children, according to a YEAR report from the National Center for Public Policy. This can put their retirement plans at risk. With real wages stagnant and unemployment among those age 16 to 24 still above 10%, many seniors have to help their adult children with rent, cell phones, cars, and vacations.
The best way to ensure a peaceful and comfortable retirement is to manage your credit cards, mortgage payments, and put a plan in place to retire debt free.
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