and Lonnie Edwards Jr. had good middle class jobs most
of their lives. He worked nearly 35 years in an hourly
union job at General Motors. She had a job in Detroit
Public Schools for 13 years as an attendance agent and
earlier as a parent liaison. She later worked for the
state unemployment agency for another 10 years.
were just middle-income earners. My goal was to be debt
free by the time we retired," said Rhonda Edwards,
didn’t quite work out that way. The medical bills hit
after Lonnie, now 67, was diagnosed with prostate cancer
in 2007, just three years after he had taken an early
retirement in his 50s.
the same time, their finances took a dive during the
depths of Detroit’s housing crisis when they had plans
to buy to a smaller co-op but had trouble selling their
family home in the well-regarded University District in
Detroit and ended up in foreclosure.
had a rude awakening that something was really going bad
in the economy," she said.
Americans increasingly are discovering that retirement
might not go as smoothly as brochures for retirement
communities and river cruises across Europe suggest.
a boatload of debt, facing job cuts and dealing with bad
health news make it tougher to pay the bills in
retirement than many expect, even long after the Great
Recession officially ended in June 2009. Some, like the
Edwards family, are able to eventually work through
their financial struggles in retirement. But the
financial curveballs can be stressful nonetheless.
families just reaching retirement or those newly retired
are more likely to have debt — and higher levels of
debt — than past generations, according to an Employee
Benefit Research Institute study of debt of the elderly
and near elderly from 1992 to 2006.
53 percent of households ages 55 or older had some level
of debt in 1998. That number climbed to 68 percent in
such a dramatic increase?
has certainly become more acceptable," said Craig
Copeland, senior research associate for EBRI in
people want more manageable payments, so they reject the
idea of taking on the higher payments associated with a
15-year mortgage — and many may have bought homes in
their 40s or 50s.
people actually have, instead of downsizing, they’ve
up-sized as they’ve gotten older. And if they’ve
taken a 30-year mortgage, that certainly would make them
be in debt into their 70s," Copeland said.
biggest bulk of the debt is the mortgage debt."
to the nonprofit Employee Benefit Research Institute,
the average debt in families in age 75 or older was
$36,757 in 2016. That is up from $30,288 in 2010.
can have a significant impact on one’s sense of
financial security in retirement — and ability to deal
with unexpected expenses — especially if they don’t
have a steady pension or anything even close to
six-figures saved up in a 401(k) plan.
are going into retirement less prepared," said
Donna McNeill, chief operating officer for GreenPath
Financial Wellness, a national nonprofit based in
safety net of a pension and retiree health care from an
employer-sponsored plan is not the scenario many people
are looking at today, she said.
it or not, more people may need to cut up some credit
cards before they retire and re-evaluate whether they
should retire in their late 50s or early 60s.
strategies worth considering if you are in or near
Focus on ditching the debt
have to be smart in how you tackle your debt,"
pay off your highest-priced loan before you retire,
including credit cards that might be charging 15 percent
or 20 percent.
even sell the family home to pay off that mortgage and
downsize to a less costly home to live in during
that home values are on the rise in many communities,
many families no longer risk going into foreclosure or
losing money selling the family home as was the case
back in 2007 or 2008.
some cases, people might even be able to use some of the
equity they’ve built in the home to deal with other
expenses in retirement.
Get a game plan for how to pay the bills
people do need extra help when it comes to budgeting,
such as finding an app like Mint and Wela. Some apps,
though, could have promotions for credit offers included
in the platform so consumers should avoid being tempted
to apply for other loans or credit cards.
Financial Wellness, a nonprofit service, offers a
"Wellness Wallet," a free personal financial
management tool via the app store.
also introduced a new program late last year called the
Simple Payment Plan, which involves a partnership with
EarnUp, an automated loan payment platform.
tool is currently free for the first year, thanks to a
sponsorship from Freddie Mac. The monthly fee later will
be $19.95. GreenPath’s number is 877-663-0143.
tool — which can be used by any age group —
automates debt payments such as an auto loan, mortgage
and student loans. The objective is to help consumers
pay bills on time to avoid late fees, as well as paying
financial counselors review clients’ loans and
expenses to help them determine the debts that should go
on the Simple Payment Plan. The payment schedule takes
into account when the consumer is paid. The idea is to
set it and forget it.
consumer can opt to round up payments to save interest
over the life of the loan.
increasing rate of consumer debt and low home ownership
rates indicate that average Americans can use help
managing their debt, according to a statement from
in automatic payment plans via utility companies and
others might also help older consumers if they’re
dealing with health issues or dementia to ensure that
bills get paid on time, according to James Ellis, a
personal finance researcher for ValuePenguin, a
consumers may want to cut back on bills and limit their
credit card spending to one or two cards, instead of
five or six credit cards. Consumers can also sign up for
bill reminders via text or e-mail.
Learn now to deal with life’s letdowns
Edwards, who retired in 2014, said she and her husband
chose to retire relatively early, he at 54 and she at
59, because it was something they had planned to do for
mother and father passed away at 33 and 57 years old,
respectively, while my father and mother died at 49 and
55," she said. Her mother died nine days after the
birth of their first child.
understood that tomorrow is not promised to anyone and
we wanted to do something our parents never experienced;
retire with a decent measure of health and quality of
life to look forward to," she said.
they started facing challenges over which bills to pay,
they decided to get help and turned to counselors at
GreenPath to get a better handle on their finances. They
were clients before the housing crisis hit.
they continue to pay off some debt but say it’s
not debt-free but we’re not swimming in debt,
either," she said.
was glad that they had outside help as they worked
through their medical bills and the foreclosure. At
times, she said, they were so stressed that they weren’t
sure how to prioritize the most important bills to pay
with the money they had.
needs to know where they stand financially," she