Personal debt is a common and complicated issue for many older adults who are nearing retirement age. Low income—combined with factors like inflation and rising health care costs—leaves some seniors with no choice but to turn to credit cards to fill in the financial gaps.

Fortunately, help is available. Working with an experienced financial counselor can allow you to get a clear picture of your obligations—and develop a practical plan to get out of debt. Managing your debt is an important part of building your retirement confidence.

How common is debt among older Americans?

More older adults are carrying debt into retirement today than ever before. Nearly 65% of Americans age 65 to 74 had debt in 2022, compared to about half of seniors age 75 and older. For contrast: In 1989, less than half of the population age 65 to 74—and only 21% of older adults age 75+—had debt.¹

What is financial counseling? How can it help older adults?

Financial counseling takes a holistic approach to improving a person’s financial situation. These services are typically offered by a nonprofit organization and are free of charge.

Your financial counselor, who is usually a certified financial planner, will look at your assets and liabilities and consider your income, savings, credit, and debt. Then, they will create a budget and action plan as well as a debt management plan, if it’s relevant to your needs—all designed to help you achieve your goals within a certain timeframe. The counseling process provides a clear, detailed, and predictable path to managing your debt.

What is a debt management plan?

A debt management plan is a three- to five-year repayment program that allows you to condense several of your credit card balances into a single monthly payment. The objective of this plan is to help you meet your financial obligations by completely paying off your outstanding credit card debt.

Debt management plans often enable significantly lower interest and creditor fees. Not everyone qualifies for free debt management; for some, there is a monthly cost for the program that can range up to $75. Success rates vary by counseling organization; you can search for reviews online. Your credit scores will typically improve as your debts are paid on time each month.

How can I find the right financial counselor for me?

When you’re searching for a financial counselor, it’s important to be selective. There are unscrupulous players out there looking to scam people out of their hard-earned money—and older adults are a common target. Learn about the top 5 scams targeting older adults.

Be sure to ask about a person's credentials, experience, and areas of expertise. If there are any costs involved, ask for this information up front. You can search for certified credit and financial counselors online using the National Foundation for Credit Counseling (NFCC) and Financial Counseling Association of America (FCAA) websites. Referrals from close friends and family can be another good way to find a counselor you can trust.

Meet NCOA’s partner, GreenPath Financial Wellness

NCOA has partnered with GreenPath Financial Wellness to offer financial counseling to older adults looking to be more economically secure as they plan for retirement.

GreenPath, which meets NCOA’s Standards of Excellence for financial counseling of older adults, is a nonprofit agency rated A+ by the Better Business Bureau (BBB). Their certified counselors have been empowering consumers to lead financially healthy lives since 1961, helping more than 200,000 people achieve their financial goals each year.

To speak with a GreenPath counselor, call toll-free 1-866-217-0543. All calls are free and confidential.

Source

1. Market Watch Guides. Senior Citizen Debt Statistics. Found on the internet at https://www.marketwatch.com/guides/banking/senior-debt-statistics