America’s baby boomers are heavily indebted. Less than half of them, however, prioritize reducing their debt, according to information provided by Ameriprise Financial. Furthermore, more than 30% of retired baby boomers have at least one debt in addition to their mortgage. These figures raise the issue of why there are so many baby boomers who are in debt.
Credit Cards
Actions You Can Take
If you’re struggling with high-interest credit card debt, you could think about exploring your options for debt relief, debt consolidation, and no-interest balance transfer cards.
You can benefit from learning about your rights as a debtor under the Fair Debt Collection Practices Act if you believe that a collection agency is unreasonably harassing you over any sort of unsecured debt, not just credit card debt (FDCPA).
Mortgages
Experian data shows that the average mortgage debt of baby boomers is over $190,000. Additionally, even after retirement, many baby boomers continue to make payments.
Actions You Can Take
Refinancing to a mortgage with a lower interest rate may be a good option for you in this situation. You could also find out if you are eligible for mortgage assistance from federal and state agencies.
Auto Loans
Among all age groups, boomers are the group with the second-highest debt on auto loans. Over $18,750 on average is owed on their auto loans.
Actions You Can Take
Selling a motorcycle or boat you don’t use much, transferring to a more cheap car, or refinancing your loan to a lower interest rate could all be advantageous in this situation.
Individual Loans
All age groups combined, boomers have the highest average amount of personal loan debt. On this count, they have an average balance of roughly $19,250.
Actions You Can Take
Searching for a loan with a low interest rate and debt consolidation are two typical alternatives you have when dealing with high-interest personal loans. Debt reduction may also be a good choice in some circumstances.
Loans to students
The percentage of school loans taken out by boomers increased from 10% in 2004 to more than 20% in 2020. In the same year, Americans over 50 had student loan debt totaling over $336 billion. The average cost per household is somewhat over $40,000.
Actions You Can Take
If you have student loan debt, you should think about refinancing it, giving it to your child, changing to an income-driven repayment plan, getting released from your co-signership, and determining whether you are eligible for student loan debt relief.
Medical Debt
Approximately 23% of boomers in the U.S. are now in debt due to medical bills, despite the fact that nearly half of all boomers have at some point been in debt due to medical expenses. Even those who are insured frequently face large out-of-pocket costs. As people get older, medical costs for baby boomers are also expected to rise.
Actions You Can Take
Start by making sure that all of your invoices are accurate if you find yourself in medical debt, even if it means employing a medical billing advocate’s services. Another choice is to bargain with your healthcare provider by stating that you can manage with any financial assistance you receive.
Other Reasons
According to the 20th Annual Transamerica Retirement Survey of Workers, around 6% boomers have existing home equity loans. Around 5% owe money to the Internal Revenue Service (IRS). Around 2% are burdened with very high interest payday loans. One in every hundred boomers has also borrowed money from friends or family. Only 25% boomer respondents of this survey said that their households were free of debt.
Conclusion
Although a sizable portion of boomers are now in debt, they can take steps to improve their financial status more quickly. However, you can benefit from getting legal counsel from a lawyer who focuses on bankruptcy and debt-related cases if you’re having difficulties paying your regular bills or are the target of continuous calls from debt collectors.