Debt can be good or bad. The former is the case when you have a grip on your debt and manage to reduce it over time. However, there is no dearth of instances when debt continues to build with age, in which case the consequences can be none too pleasing. The negative effect that debt can have on the baby boomer generation’s financial security is vouched for by a well-collated AARP blog post.
According to a 2021 AARP survey surrounding how financial experiences during the pandemic shaped future outlooks highlighted that people felt the two main obstacles to saving more for retirement included having to make payments toward existing debt (44%) and not having enough money (55%).
Another factor that does not auger well for the boomer generation is that it is carrying more debt than at any other time in history. Data released by the Federal Reserve Survey of Consumer Finances shows that while 60% of families with those over 50 years of age carried debt in 1998, the number increased to 71.6% by 2019.
Further, according to the Household Debt and Credit Report released by the Federal Reserve Bank of New York in February 2022, the total debt balance of those between 50 and 59 years of age increased from around six million dollars in 2003 to around 12 trillion dollars in 2021.
With debt having doubled for this age group and even those over 70 years of age in a little over two decades, the threat to the retirement security of scores of Americans seems apparent. Factors that may make matters worse than they appear include higher costs of living and largely stagnant incomes.
The Effect of Debt on Baby Boomers
Older people who face debt-related problems after retirement can find it challenging to keep up with monthly payments. The debt doesn’t come only from mortgages or home equity loans, but also from auto loans, student loans, and credit cards. Unfortunately, as the older population spends more money toward repaying debt, it has lesser than required to meet day-to-day expenses and save for retirement.
The Psychological Effect
Different studies have shown that people who have trouble managing their debt have an increased chance of suffering from depression and anxiety. Recurring headaches, low quality of sleep, and the inability to focus might also be part of the parcel. Add to the fact that many have to deal with collections harassment, increased stress is near-inevitable.
Might You Have a Debt Problem?
Answer these simple questions to determine f you might have a problem with debt.
- Are you typically anxious or worried when thinking about making monthly payments?
- Do you miss or have trouble keeping up with your monthly payments toward utility bills or different types of credit?
- Do you steer clear of answering phone calls from unknown numbers because of outstanding bills?
- Have you been able to save adequate money for retirement or to deal with emergencies?
While there are several reasons for baby boomers’ debt problems, taking remedial measures in time can help ease the financial burden. For instance, if you’re facing challenges in keeping up with regular monthly payments, you may consider speaking with an attorney to discuss all possible debt relief alternatives.