Years before I was old enough to get my own credit card, I remember watching the Yuppies in the 1980s as they swiped their credit cards at the mall and put things on credit. Many of the much-despised Yuppies became the older Baby Boomers who are now retiring with more credit card debt than younger people and hitting their own debt ceiling.
According to a recent article by USA Today, older Americans use credit cards as a financial safety net. They also don't pay down as much of their debt compared to younger people, according to a new study by public policy organization Demos for the AARP.
As a member of Generation-X, I have no interest in retiring with massive credit card debt. I also am not looking forward to being saddled with trillions of dollars of national debt because of the irresponsible policies of Baby Boomer politicians.
Being bailed out
I think the situation with the national debt mirrors the credit card problem that many older Americans have today. Members of the Greatest Generation never would have accumulated personal debt. Instead, they left large inheritances to their Baby Boomer children. Many Baby Boomers were essentially "bailed out" by their inheritance money. Meanwhile, Gen-Xers need to be responsible enough to have enough retirement savings to make up for the Social Security shortfall when they retire. They also can't rely on any inheritance since their parents are will die broke with credit card debt and reverse mortgages. Moreover, they can expect much of their paychecks to be taxed to pay for the national debt.
Charging for necessities
According to the study, half of the senior citizens use their credit cards to pay for medical expenses as well as car repairs. Thirty-eight percent charge home repairs while 34 percent use credit cards to pay for mortgage payments, groceries and utilities. I think what the younger generation has learned is that they have to save money when things are going well so they have money when things are not going as well.
Using credit to cover surprises
When a younger person uses a credit card to cover an emergency, it's not as much of a problem. They can usually work extra hours to pay off the debt. Most senior citizens are on fixed incomes with little job prospects. A senior citizen friend received a letter for the Social Security administration almost a year ago explaining she would receive an increase in her check because of an error they made. The other day, they sent another letter saying they had made a mistake and that they would be taking the money back. She wouldn't be issued a Social Security check for a month because of the miscalculations. Since she depends on her Social Security check, my friend resorted to using her credit cards for the month.
The study also showed that half of senior citizens have tried to negotiate what they owe by calling debt collectors. Also, a growing number of people 55 and older are seeking help from credit counselors. So many older Baby Boomers were anxious to retire as soon as they were eligible to receive any kind of Social Security check. At a certain point, they won't be able to pay the minimum balance. It's not surprising that the United States is on the brink of defaulting when their elders can't get their own personal finances in order. It's up to the rest of us to be financially responsible.
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