Debt hobbles older Americans Retirement

Discussion in 'Economy' started by hvactec, Sep 11, 2011.

  1. hvactec
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    hvactec VIP Member

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    More Americans are reaching their 60s with so much debt they can't afford to retire.

    Most people used to pay off their debts before retiring. But as wages have barely kept up with rising prices over the past 35 years Americans have pushed debt higher, living beyond their means. Now, people are postponing retirement, cutting living standards or both.

    All kinds of debt held by this age group have risen, but the big problem is mortgages. Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20% had secondary mortgages, including home-equity lines, according to research group Strategic Business Insights' MacroMonitor. That was up from just 22% and 12%, respectively, in 1994.

    The housing crash has made things worse. A few years ago, homeowners in their 60s with big mortgages could sell their homes for a profit and buy smaller places or rent. But the drop in housing values means that many homeowners have little equity, and some now owe more than their houses are worth.

    People have tried to reduce debt since the financial crisis, with limited success. Americans of all ages owed $11.4 trillion at the end of the second quarter, based on data from the Federal Reserve Bank of New York. That's down about 15% from 2007 but nearly double what they owed in 1999, adjusted for inflation and population.

    Older Americans also have struggled to dig out in the past four years. "Relative to the value of their homes, the amount of indebtedness if anything has gone up because house prices have fallen faster than mortgages have been reduced," says Christopher Herbert, director of research at Harvard's Joint Center for Housing Studies.

    Many have little choice but to keep working. "I imagine I'll be working until I'm 70," says Christine Shiber, a 59-year-old Methodist minister in California's Bay Area, struggling to pay off her mortgage, credit-card debt and a loan she took against her retirement account.

    Debt isn't the only issue clouding retirement prospects. People aren't saving enough either. As calculated in a Wall Street Journal article earlier this year, the typical American household nearing retirement with a 401(k) retirement account has less than one-quarter of what it needs in that account to maintain its standard of living in retirement.

    Four out of five households with heads in their early 60s and with mortgages had too little savings in 2008 to pay off debts without dipping into retirement accounts, according to Boston College economist Anthony Webb.

    Read more debt-hobbles-older-americans-retirement-wsj: Personal Finance News from Yahoo! Finance
     
  2. Douger
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    Douger BANNED

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    You refer to murkins. They don't have enough sense to live within their means.
    I don't know a single soul that has a mortgage or credit card.
    Built by hand as the cash flows. Meet Milton.$0 in debt.
     

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  3. uscitizen
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    uscitizen Senior Member

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    Kinda goes against what some say about if they had just been allowed to save their SS contributions....
     
  4. Truthmatters
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    Truthmatters BANNED

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    imagine if they had privatised SS like they wanted to
     
  5. California Girl
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    California Girl BANNED

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    They should have been more sensible.
     
  6. hvactec
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    hvactec VIP Member

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    More Americans are reaching their 60s with so much debt they can't afford to retire.
    Most people used to pay off their debts before retiring. But as wages have barely kept up with rising prices over the past 35 years Americans have pushed debt higher

    Only US Politicians or people with Government jobs can retire with great benefits and a pension + Social Security as a back up in there 60s

    the System is all based on Greed these days, more corrupt then ever, nothing to do with living above your means I remember back in the 1970s making 500 a week that was big money back then. also going shopping filling up a shopping cart with 20-30 dollars with food.

    Today it 4+ dollars for a gallon of milk 2 to 3+ dollars for a loaf of bread. cost 200 to 300 to fill up a shopping cart with food and that's being thrifty.
    gas, heating bill, cooling bill, water bill sewer bill, phone bill, Basic cable 130 dollars a month everything went through the roof.
    years ago u had no cable bill

    THE THING IS WAGES HAVE WENT UP FROM 1976 TO 2011 VERY LITTLE
     
    Last edited: Sep 11, 2011
  7. Big Black Dog
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    Big Black Dog Gold Member Supporting Member

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    I'm retired. I'm debt free. Well, once a month I get the wife's credit card bills. Then I'm debt free again until the next month. It's a vicious circle...
     
  8. Douger
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    I try not to do bad trips or nightmares but SS has been raped by the queen and her ilk (bankers) so it can go either way for you guys.
    Down in these parts it is an account. Nothing more/can't be touched / no matter what. It's there and always will be.
    In Chile it's very strong.No problem.
    In Costa Rica it's somewhat underfunded but that is (slowly) being addressed.

    In Nicaragua ? Who knows. The populace here are uneducated uninformed morons(but good souls) that have no clue what Ortega and company are up to.
    I feel for them. Kinda like murkins ! They even have the all seeing eye printed on the Cordoba.
     
  9. expat_panama
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    expat_panama Silver Member

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    This is part of a continuing series on how Americans are hopelessly falling into debt. Sure, these days we got lots of people -President on down-- that like nothing better than to say bad stuff about America. This 'debt' story's just not true though, and the WSJ along with their useful idiots are stuck on stupid.

    The article had a proprietary graph that attempted to show old people were hopelessly buried in mortgages. Even if the magical "SBI MacroMonitor" were honest with their undocumented claim that the % mortgages doubled since '94, the Federal Reserve says the amount of equity has doubled too:
    [​IMG]

    No link/source was provided, probably WSJ readers are easily convinced. The latest numbers from FRB: Z.1 Release--Flow of Funds Accounts of the United States--June 9, 2011 put total household debt at $13.9T, divided by 111M households averages out to $124K. Adjusting for inflation that's 10% down from 2007, and 54% higher than 1999.

    Debt's up and so are assets. In fact, average household net worth (wealth left after debts paid) is $530K, and that's 5% higher it was in 1999. We're better off and only people going hopelessly into insolvency are old time newspapers like the WSJ.
     
  10. RadiomanATL
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    RadiomanATL Senior Member

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    Don't purchase more than you can afford.

    Problem solved.
     

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