Far more seniors go into retirement with debt today than ever before, and they carry more debt longer than any generation in the past, according to the National Council on Aging (NCOA). Medical debt, credit card debt and housing debt are the primary culprits, all of which force millions of seniors to put off important needs like car repairs just to keep the wolves at bay for another month. In the worst cases, medicine and even food are sacrificed to the altar of high-interest loans.
Get the Most Out of All the Benefits You Have Coming
All seniors, debt or no debt, should visit the National Council on Aging’s BenefitsCheckUp site. There are 2,500 programs available to seniors across all kinds of categories, including medication, healthcare, income assistance, food and nutrition, tax relief, help for veterans and employment.
Just type in your ZIP code to find out which benefits are available in your area, answer a few quick questions and join the more than 9 million people who have used it to take advantage of nearly $40 billion in benefits.
Whether or not you find a program specific to helping you manage debt, you’ll be better prepared to get out of the red if you secure benefits that can help you relieve financial pressure in general.
You Are Not Alone — Get a Debt Counselor in Your Corner
Seniors in almost all circumstances can enlist the help of a credit/debt counselor for free. If you’re struggling with debt, this is a good place to start. According to the Federal Trade Commission (FTC), most reputable credit counselors are part of nonprofit organizations. They can talk you through your situation on the phone, online or in person. Start looking for free credit/debt counseling services at:
Your local credit union
Your local university
Your local branch of the U.S. Cooperative Extension Service
Your local consumer financial protection agency
Your bank or other financial institution
The United States Trustee Program maintains a list of credit counseling agencies, as well. When you find one you like, check with your state attorney general to see if it’s facing any complaints or legal actions. According to the AARP, which offers a good primer on how seniors can choose the right debt counseling service, you should get started as soon as possible — taking no action always makes things worse.
The following organizations provide services designed specifically for the special challenges that seniors face when they fall into debt. They include things like free credit counseling, legal aid for things like collections, bankruptcies or judgments, debt relief services, education and workshops, credit repair and financial planning.
National Council on Aging’s AgeWell Planner
National Association of Senior Legal Hotlines
MoneySmart For Older Adults by the FDIC
AARP Foundation Finances 50+
Supplemental Security Income
Many religious and secular nonprofits also provide free financial help to seniors for debt relief and other immediate needs, including:
If you have a life insurance policy that you no longer need, you might be able to sell it through a broker. Not only will you ditch the monthly premium payments, but you can also dedicate some or all of the cash payout to tackling your debt.
Be warned, however, there is a lot to consider. It’s a complicated process that must include a broker as a go-between — and those brokers are known for taking sky-high commissions. It’s hard for the average person to know if they’re getting a good price, the bidding process is complicated, payouts are often small and whatever cash you do receive will probably be taxed.
Also, there’s one last morbid but noteworthy consideration — your death becomes a profit motive for a stranger.
There’s also the option of a reverse mortgage, a transaction that lets homeowners 62 and older convert some of the equity in their home to cash without selling their house. Reverse mortgages can and do help some seniors get their hands on sorely needed money for things like paying down debt. Here, too, however, it’s a complicated process that isn’t right for everyone. There are fees, risks, tax implications and consequences for your spouse and/or heirs. Visit the FTC’s reverse mortgage page and the NCOA’s reverse mortgage counseling page to learn more before you decide.