High Debt Is Ruining Retirements Everywhere. 4 Ways to Fix It

Senior citizens are carrying an increasing amount of non-mortgage debt. The average amount of non-mortgage debt among people 65 to 70 living in the 50 largest U.S. metropolitan areas is $20,643, according to a Lending Tree study.

The figure spikes to $30,000 in the city where older people have the most debt, San Antonio, Texas. In that city, nearly $9,600 of seniors' total debt is credit card debt, above the national average of credit card debt for all age groups of $6,354; The remainder of debt stems from car loans. Understandably, student loan debt isn't a hurdle for the 65- to 70-year-old group like it is for millennials and younger generations.

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Massive debt is a problem for older people because so many live on a fixed income. The average Social Security monthly benefit is $1,461.31, and it's intended to make up one-third of the average recipient's income. The ideal Social Security recipient who depends on benefit payments for one-third of their income would have a total monthly income of $4,384 per month, assuming they made up the difference in personal retirement savings and supplemental income sources.

The median payment on credit card and car loan debt is about $412 per month, assuming the minimum payment is the standard 2% of the balance -- Ouch. Once you cover the essentials like your mortgage or rent, food, gas, energy costs, healthcare and other inescapable bills, there might not be much money -- or any money -- left over for paying down debt.

Debt problems aren't confined to the monthly struggle to pay bills. Any unexpected expense, whether it be a car repair or surprise healthcare bill, can leave you unable to pay rent, your car payment, or other bills. The temptation to take on more credit card debt to get by nags at you, and if you give in, a vicious cycle begins. Senior citizens who are struggling to pay their existing debt, while incurring more debt to stay afloat are not living their best lives in retirement.

Fortunately, there are solutions for seniors with mounting debt.

1. Pay down debt systematically

The best way to get out of debt is to pay it down using a strategic method.

If you have more than one credit card, pick one to focus on paying down the fastest, while making the minimum payments on all the others. There are two traditional methods to reducing debt and they have different benefits and drawbacks, so determine which works best for you.

The debt snowball method means you focus on paying the debt with the lowest balance. Throw all the money you can at the balance, and once you've paid it off completely, focus paying down your card with the next-highest balance, until you're debt-free.

The debt avalanche method means you focus on paying the debt with the highest interest rate. Look at the annual percentage rate (APR) on each of your cards. Shovel all the money you can at the highest one, then move on to the next highest until you're debt-free.

Once you pick which method to employ, see how much money you can dedicate to paying down your debt each month, while making sure your needs are met. Don't work without a net; you need a budget that clearly tells you how much your expenses are, and how much income you have.

If you don't currently work with a budget, start developing one now. Find your fixed expenses like rent and utilities from your bank statements. Collect a year's worth of variable expenses, like food, bills for heating and cooling your house, gas, and all other costs that fluctuate, and divide them by 12 to find a target monthly amount per category. Then, do the same for discretionary expenses, such as vacations, gifts to kids and grandchildren, and eating out. Compare your income to your expenses, and then you can determine what you can reasonably pay each month to reduce your debt.

2. Strategize lowering your monthly payments

High monthly payments are one of the main impediments to paying off debt, especially with current sky-high interest rates on credit card debt. The higher your interest rate is, the higher your minimum payments will be. Especially for people with higher debt levels, sometimes you can do little more than pay the interest payment and a minimal amount of your principal balance. Going that route can take a very long time and cost a lot of money in the process of getting out of debt. Yet, following the traditional advice of paying off your balance in full seems so far out of reach because you're so far behind.

There are some strategies to help you lower your monthly payments. First, because interest rates on personal loans can be considerably lower than those on credit cards, it could make financial sense to consolidate your debts with a low-interest personal loan, if you can get one.

Second, many credit card companies offer a low or even 0% introductory interest rate to folks who roll over their existing card balances, and the lower rates could result in lower payments temporarily. Be careful to follow the terms of the agreement, though, so you aren't suddenly stuck with higher payments when the introductory interest rate period end, and the debt trap starts over.

3. Increase your debt payments

You can get out of debt faster if you're able to devote more money to your monthly payments. Review your budget to see how you can put more money toward debt service.

If you can't find room to skrimp and save, enact strategies to earn more money. Take a part-time job or join the gig economy, and dedicate the income from it to debt repayment. If you're still working, see if a higher-paying position or a promotion is possible, and then devote your raise to debt reduction.

The other side of the "freeing up money" coin is to reduce your expenses. There are many ways to reduce your daily expenses.

If you own a home, consider downsizing, taking in a roommate, or renting on Airbnb. Housing costs can be large, especially with exorbitant property taxes and the cost of home repairs, so curbing housing costs can net you a few hundred dollars more each month to apply toward lowering your debt balance.

Finally, if you live in a high-cost area, consider moving to an area where living expenses are lower. The lowest-cost states for retirees are South Dakota, Florida (some areas are still cheap), New Hampshire, Utah, and Idaho.

4. Lower your car loan payments

So far, we've discussed reducing credit card payments, but much of senior citizen debt is in the form of car loans, and their corresponding payments.

If your car loan comes with high monthly payments, it may be time to rethink your commitment to a car. The average new car sets the buyer back $31,000, while a car's value can depreciates as much as 46% in the first few years. You may be paying a high amount each month for a car that's not worth nearly as much as when you bought it. If your monthly car payments are driving you into the ground, it might be a good idea to trade it in, or sell it through a used car dealer or online auto trader. Do some research to see what avenue works for you, if you decide to shed your pricey wheels.

Auto depreciation also means a fairly new used car can be purchased for much less than a new one. Shop around for gently used cars whenever you're in the market to buy one or decide to do a trade-in. Banks, credit unions, and other financial institutions offer loans for used cars. See what the monthly debt service on a loan would be. Perhaps a switch could benefit you financially, while still leaving you behind the wheel of an excellent vehicle.

Leasing a car rather than buying one is also an option. Leasing costs vary widely depending on make, model, and down payment, but they're considerably less than monthly car payments. If signing a car lease frees up money from an existing car loan to put toward high-interest debt repayment, that could be something to consider.

Think about how your car payment makes sense in your life. If you're retired, you may depend on a car less than you used to; There's no daily commute to work! If your family has more than one car, consider selling one.

Find out about public transit options. Could you take public transportation ike the subway, train or bus, or could you utilize rideshare services like Uber or Lyft to retain your flexible mobility? If so, bidding farewell to your car could be a good strategy for increasing your disposable income to reduce your debt.

Putting together some of these strategies in a deliberate retirement plan should help you live the stable and secure retirement of your dreams.

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