Are You Retiring in the Red or the Black?

Did you know:

• Approximately one in three Americans aged 62 or older is expected to have debt in retirement (1)
• One-third of people over 65 rely on Social Security for 90% of their income. (2)
• 32% of retirees have less than 10,000 saved. (3)
• 31% of retirees carry mortgages. (4)

  Forty years ago the financial future for today’s senior adults radically changed. Instead of saving to make a purchase, people in the 70’s had a new option—credit cards.  Unfortunately, many seniors are now experiencing the backlash.   In a recent survey people 62 and older were asked how many years it would take to pay off their debt. Here are the results (1): Less than one                          14% One to less than five             41% 5-10                                            16% 10 or more                               12% Never                                         17%   Those nearing or already in retirement will likely face the challenge of living on a reduced income. Additionally, many seniors do not have the benefit of pensions to supplement their income or pay for rising health costs. While debt is not prohibited in the Bible, these statistics explain why it is strongly discouraged (Deut 28:43-45). Debt relies upon future income for repayment, and almost always comes with costly interest. If you find yourself in this distressing situation don’t lose heart. With God’s help there is always hope. Listed are a few practical suggestions.   1. Honestly assess your situation. Write down everything you owe. Denial will only delay the consequences 2. Develop a plan using a computer program or paper. There are numerous systems online. Knowing where you stand financially is the key for working on a debt reduction strategy.  And attend a biblically based class that focuses on God’s perspective of money. 3. Evaluate your expenses. To quit spending “cold turkey” is unrealistic. For example, to stop eating out altogether may be unreasonable, but you can switch from four nights a week to twice, and choosing less expensive restaurants. 4. Seek wise, trusted counsel and accountability. This could include your spouse, a budget counselor, or a professional. When choosing a professional make certain he/she has your value system and does not have a vested interest. Remember that being a Christian does not automatically qualify the person as a good financial expert.   God isn’t sitting in heaven with a calculator. He is more than willing to meet you right where you are. And he desires your financial freedom even more than you do. Trust Him.   1-USA Today, 3.12.08, Jae Yang, Robert W. Ahrens. Source: Financial Freedom Senior Sentiment Survey. 2-Moneycentral.msn.com Liz Pullman Weston 3.22.07. 3-EBRI issue brief No. 304, April, 2007, www.ebri.org 4-USA Today 6.5.07, Jae Yang, Bob Laird. Source: Financial Freedom Senior Funding Survey.