Older Americans with Mounds of Debt Seek Financial Freedom

PHOENIX, Ariz. (October 10, 2005)…Older Americans are the fastest-growing demographic at Take Charge America, a national consumer credit counseling agency. Soaring health costs, rising interest rates, unplanned expenses such as the death of a spouse, and now, rising gasoline prices, are affecting millions of seniors in the United States. Fortunately, many of these older Americans are seeking help in search of financial freedom.

In 2002, more than 450,000 people over the age of 50 filed for bankruptcy, according to the Consumer Bankruptcy Project at Harvard University. For those who are trying to pay off their credit card debt, the latest report by the research firm, Demos, cites that one-fifth of seniors spend more than 40 percent of their income on debt payments alone.

“In recent years, the slowdown in the economy and the workforce has disproportionately hit older Americans,” said Mike Sullivan, director of education for Take Charge America. “Older Americans are often the first to leave their jobs and the least likely to find new work. Many are reluctant to reduce their current lifestyles and rely on credit to carry them through times of reduced income.”

Sullivan also suggests that longer life expectancies may be fueling debt. Older Americans are increasingly called upon to support their even older parents as well as their adult children. In addition, Americans are having children later in life, moving major expenses, such as college, children’s weddings and related expenses, closer to retirement. While the financial situation for some seniors may look bleak, Sullivan says that there are ways to turn things around for the better. He provides the following tips and ideas for seniors to manage their finances and combat debt.

• Seek help – Talk openly with your children or family members about your financial situation. It’s okay to be afraid or embarrassed at first, but they are there to help you and will have your best interest in mind.
• Prioritize debts – Pay off high-priority debts first and as soon as possible. Debts that may affect your property or car should be at the top of the list. Do not open any additional lines of credit, such as home equity loans, to pay off these debts.
• Reverse mortgages – Many older Americans arrange for reverse mortgages on their homes. Homeowners receive monthly cash payments, converted from the home’s equity, for a specific amount of time. For more information on the plan and how to qualify, visit http://www.aarp.org/money/revmort/.
• Prescription Drug Programs – Many states participate with pharmaceutical companies that offer discounts on prescription drugs for low-income households. Contact the pharmaceutical company for more information and application forms.
• Spousal benefits – Divorced seniors may be eligible for spousal benefits if they were married for at least ten years and have not remarried. Benefits can be collected as soon as your partner is eligible for Social Security. In most cases, you need to be divorced for at least two years to receive benefits unless you began collecting before the divorce.
• Beware of scams – Older Americans are often the targets of aggressive credit card companies and scam artists who may offer too-good-to-be-true rates over the phone. Do not provide any personal information unless you initiated the call and know who you are speaking with.
• Return to the workforce – Part-time jobs can be rewarding and low stress. People over the age of 65 who go back to work will not lose their Social Security benefits; those who collect Social Security before they reach full retirement age can earn up to $12,000 a year without endangering their benefits.
• Use credit cards sparingly – Use credit cards for emergencies only and charge amounts that you can pay off each month. Paying only the minimum payments on credit card bills can sometimes put you in more debt than you started with.

About Take Charge America
Founded in 1987, Take Charge America, Inc. (TCA) is a non-profit 501(c)(3) organization headquartered in Phoenix, AZ. TCA is committed to helping consumers gain control of their finances and offers a variety of services including education, budget and financial counseling, and when necessary, debt management.

TCA also serves as an effective resource for the business community. We help financially distressed consumers re-organize their finances and return hundreds of millions of dollars annually to financial institutions, professional service providers, and businesses of all sizes and descriptions that may otherwise have been lost to the economy in bankruptcy. TCA’s diversified programs are utilized by tens of thousands of families and single men and women throughout the United States each year.