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Rising costs a growing issue for seniors

The Associated Press
July 12, 2004

NEW YORK — U.S. seniors, who weathered the Great Depression or grew up in its shadow, have a reputation for frugality and saving. Of all generations, this was the one that got it right by pinching pennies, avoiding credit and putting money away for retirement and to pass on to their children.

Yet an increasing number of older Americans find themselves deep in credit-card debt or filing for bankruptcy — troubles associated with their baby boomer children and their grandchildren.

The reasons vary, but experts say that some retirees are overwhelmed by rising medical expenses or find that Social Security and their pensions don’t stretch far enough. People who lost jobs before they were ready to retire never quite caught up.

Dollie Hawkins, an 84-year-old retiree living in Miami, dates her financial problems to 1982, when the company she worked for went out of business and she lost her full-time nursing position. She said she looked for another permanent job but could only get short-term, private-duty work.

“You fill out applications and they tell you, ‘We don’t need anyone now,’” she said. “It’s not that. It’s the age thing.”

Hawkins, a widow, said that as bills “began to crowd up on me,” she turned to credit cards and ran up $11,000 in debt. She is trying to pay it down from her Social Security benefit and savings.

“Sometimes, I wished I could have walked away from it, but I wasn’t raised that way and I feel responsible,” Hawkins said.

The rising cost of health care and medications also burdens for seniors.

Stuart Zimring, president of the National Academy of Elder Law Attorneys, said he is seeing more older couples who get into financial problems because “cash flow is not keeping pace with the cost of living, particularly the cost of health care.”

And because seniors are proud and protective of their independence, they often try to hide their financial distress from their families.

Just how big a problem is elder debt?

A study by Harvard University’s Consumer Bankruptcy Project reported that the actual number of seniors filing for bankruptcy is small. In 2001, 82,207 bankruptcy petitioners — or 4.6 percent of the total of 1.8 million — were 65 or older, the study found.

Still, it was the fastest-growing group of petitioners, the Harvard study said.

A separate study by Demos, a New York-based think tank, reported that seniors older than 65 were carrying an average of $4,041 in credit-card debt in 2001, nearly double the amount reported by seniors 10 years earlier.

Tamara Draut, director of the economic-opportunity program at Demos, blames “weakening of the three-legged stool” that elders are supposed to rely on — Social Security, pensions and private savings.

Seniors often find their Social Security income reduced when a spouse dies. Fewer workers get traditional pensions, and many retirees have seen companies cut back their pensions or health-care coverage. Savings, meanwhile, took a hit during the 2000-02 bear market on Wall Street or weren’t large enough to begin with.

And seniors also have succumbed to the siren song of easy credit.

That is what Dale Gravelle, a 67-year-old nurse from Attleboro, Mass., says happened to her.

Gravelle said she used to pay cash for everything but then started using credit cards.

“I had too many cards, and I got in deeper than I thought,” she said. “I kept paying, but the interest was so much. I just got overwhelmed.”

After creditors started calling her, sometimes two or three times per week, she went to a nonprofit counseling agency, Consolidated Credit Counseling Services Inc. of Fort Lauderdale, Fla., to work out a plan to pay off her debt.

“I would advise people, especially if you’re older — and even if you’re still capable of working — not to rely on credit,” Gravelle said. “Relay on good, old-fashioned cash and maybe a debit card for some bills.”

Howard Dvorkin, president of Consolidated Credit, said he is seeing an increasing number of seniors with debt problems.

Some of those in trouble, he said, were lured into the stock market during the 1990s boom and lost most of their money is the bear market that followed. For others, the low interest rates of recent years have meant their investments are not providing the additional income they expected.

“For a lot of them, it’s an issue of pride,” Dvorkin said. “They think, ’I got myself into this and I’m going to get myself out of this.’ They’re fighting not to die in debt.”





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