The American dream for retired people used to look a lot different than it does now. In the past, people who were nearing retirement were sent off to enjoy their golden years free of debt or responsibility. Today, this is often not the case. As more New Yorkers are reaching retirement age, fewer are doing so debt free. In fact, Americans of all ages are saddled with more credit card debt than ever before. Furthermore, retirees still have other types of debt including mortgages -- one study claims that 39 percent of houses with an owner between 60-years-old and 64-years-old still had at least one mortgage on their home.
After years of living through a struggling economy, people have had to do anything they can to make it through. As a result, the average American adult carries at least $4,878 in credit card debt. 40 percent of people cannot afford to pay their balance off in full each month and therefore are subject to high interest rates and other penalties.
However, experts suggest that people nearing retirement come up with a plan to deal with their credit card debt as soon as possible. In these cases, people have a couple of debt relief options. One, they can try to negotiate the debt down with the help of credit counselling and other similar services. However, there are many scams that can actually hurt a person's financial standings even further and offer no debt reduction.
Two, people can consider bankruptcy. While a bankruptcy will still on a person's credit history for at least 10 years, it can help give people the fresh financial start they need as they are entering their retirement years. It can help to eliminate credit card debt that may be making it impossible for people to save for their retirement.
Those considering retirement who are struggling with credit card debt should make sure they understand their legal options. Through Chapter 7 or Chapter 13 bankruptcy, people may be able to get the relief they need.
Source: Daily Finance, "How to Confront Debt Before You Retire," Daniel Solin, March 5, 2014