According to the Federal Reserve in New York, two million Americans over the age of 60 have an outstanding student loan balance. Overall, the amount of student loan debt owed by those over 60 is $43 billion. This is up from just $5 billion in 2005. Statistics from a study done by Experian reveals that baby boomers also have the highest average number of credit cards and credit card debt.
Experts say that those who are trying to retire while also trying to pay down debt may benefit from talking to a financial adviser. Some options to deal with any outstanding debt may be to extend the length of time allowed to pay the debt or to consolidate multiple loans. However, creating a plan to eliminate debt will depend on the type of debt that an individual has.
When dealing with student loan debt that was used to help a child go to school, it may be worthwhile to ask that child to assume the debt if possible. When dealing with a mortgage debt, it may be worthwhile to do a long-term projection to see if paying off that mortgage now is better than paying it down each month. While there may be financial reasons to pay off a home loan, the mortgage interest tax deduction may be helpful as well.
Understanding how to deal with debt may make it easier to get rid of in an orderly fashion. Paying down student loans, mortgages or credit card debts may allow more money to be used in retirement to pay for wants as well as needs. Speaking with an attorney may help older Americans determine if discharging current debt may be a useful strategy to improve their financial situation as they near retirement.
Source: FOX Business, “Boomer Retirees Need a Hand Paying Down Debt”, Casey Dowd, October 09, 2014