TThroughout life, we always look up to our parents for guidance. They are the closest most of us get to wisdom. Ultimately, your parents have experienced many obstacles in their lives. When they give you some advice, typically, you know that it comes from experience.
As such, it might come as a surprise to discover that seniors’ debt has skyrocketed by over 540% in the last two decades. According to data from the Federal Reserve Bank of New York, Americans over 70 carry a total debt burden of $1.1 trillion. How can our parents have created such a dramatic financial situation?
Living costs increase faster than their income
A lot of seniors today followed the example of their parents. Many have grown used to managing the household budget by learning from parents and older relatives. As such, it would be unfair to pretend that seniors don’t have a budget plan. They do. But unfortunately, many fail to account for the increasing living costs. As a result, it’s not uncommon for pensioners to have retired with a budget that doesn’t meet their current life needs. Unfortunately, in retirement, the income doesn’t increase any further, which exposes them to high debt risks. For many, there is no further option than to consider the best debt management solution and compare debt relief vs debt consolidation plans. A lot of seniors try to obtain a debt consolidation loan, which isn’t always the most suitable solution with their limited income.
They don’t realize how much they spend
As you become an adult yourself and run your household, your relationship to your parents change. In an adult world, you can even become the person who advises them on the best course of action for their finances. Unfortunately, not every senior parent is happy about the shift in the relationship. Some can become stubborn and refuse to listen to you because they knew better in their times. Others are stubborn for other reasons, such as a decrease in their cognitive abilities. In other words, you may notice that the only reason why your parents are spending so much is that they don’t realize how much everything costs today.
They are not ready to retire
Perhaps, one of the most surprising things that cause debt for seniors is the fact that they are not thinking about retirement. Many take on big purchases and loans late in life because they assume that they will carry on working for long enough to pay off their debts. Unfortunately, this attitude can expose them to devastating financial losses in later years, when they are forced to retire for health reasons or because the business needs to make room for younger professionals.
They want to help you
As an adult, you know that you’ve already had to face difficult financial choices. Paying off your student loans or saving for your home deposit, for instance, can be a debilitating obstacle in your first years as a money-earning professional. Parents are the first to offer their support.
In conclusion, seniors’ debt is hard to avoid. However, you can help your parents navigate to financial safety. Additionally, observing their mistakes is the best way to avoid making them! As the pandemic is putting the world’s economy to test, things are likely to get worse for you when you reach retirement age. So the sooner you become aware of the risks, the better it is!