Today, many Americans are still struggling under the weight of considerable debts for a large number of reasons, and one demographic that might be particularly affected by this trend are those in the baby boomer generation.
Credit card debt and other financial concerns can put a serious damper on retirement savings, and research from the AARP shows that 34 percent of older Americans use these accounts to cover basic living expenses, including paying for groceries and utilities, and even covering mortgage payments, according to a report from USA Today. As a consequence, the average amount of credit card debt held by people over the age of 50 is $8,248, and half of all people in that group have received calls from debt collectors in the past.
Just how big of a threat is this issue to older Americans’ retirement plans? Data from TD Ameritrade shows that the average baby boomer is short about $500,000 when it comes to covering all their requirement savings needs, the report said. Further, about 74 percent of those polled said they have plans to rely on Social Security payouts as their one of their primary income sources in retirement, but the average payout from that program is just $1,230 per month.
As such, more people are now working past the age of 65 by a few years or more as a means of making up some of the ground toward a fully-funded retirement, the report said. The proportion of people over the age of 65 who are now in the work force is 65 percent, up from just 12 percent in 1990. Another reason for this, though, is that retirement is generally growing more expensive.
“We will have to work a lot longer and get by with less,” Olivia Mitchell, professor of economics and executive director of Pension Research Council at Wharton School of Business, told the newspaper. “It’s just getting a lot more expensive to be old than it used to be.”
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Of course, many baby boomers may be facing financial hardship as they approach retirement through no fault of their own. During the recent recession, many older workers were laid off and had to dip into retirement savings or lean more heavily on credit cards as a means of making ends meet, leading to greater financial problems today.