Here's the good news: Americans are actively looking for ways to spend less, they're getting more disciplined about borrowing, and more of them are setting side savings for emergencies, concludes a new study, "Debt: The Detour on America's Road to Retirement," published by life insurance company Securian.Here's the bad news (there's always bad news, isn't there?): For all their good intentions, Americans aren't actually working down their debt. "Overall, the amount of debt reported in the Securian survey has not changed since the 2007 survey," states a press release summary. Except among Baby Boomers. They're in worse shape. Says Securian: "Now one in five of the Boomers who are in debt owe at least $50,000 in non-mortgage debt, compared to about one-tenth in 2007."
The early 21st century is giving birth to a new phenomenon: the debt-addled retiree. Way to go, guys. Let's see how the debt thing works for you while you're living on fixed incomes, you're making minimum payments on your credit cards, and the interest starts consuming you like flesh-eating bacteria!
Reading between the lines of the Securian data, it appears that Americans are curtailing their spending mainly in one area: Buying cars. The number of survey respondants making car payments declined from 57% in late 2007 to 47% now. (E.T., call Detroit.) Otherwise, the percentage of Americans with credit cards, home equity loans and other non-mortgage debts remain about the same. Anyone want to bet that as soon as the economic picture brightens, Americans will stampede back into the auto showrooms?
Securian looks for the silver lining: "While the study shows little evidence that more Americans are paying down their debt, the ability to tread water against the current is encouraging. It appears the recession is teaching Americans a lesson about debt and dealing with personal finances, leaving them optimistic about future improvement in their financial lives."
Exculpatory factoid: The U.S. personal savings rate in the 1st quarter of 2009 did edge up to 4.0% from near zero in 2007 and 2008, so somebody must be saving something. But that's still less than half the traditional U.S. savings rate, and far lower than that of most European nations. For Boomers approaching retirement, time is running out.
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I was waiting for some others to comment but 50K worth of non-mortgage debt?
ReplyDeletethat's staggering....
is it as simple as saying that much of it for cars and college...???
I think most folks (at least it used to be) think about going into retirement with a house they own outright and most if not all of their debt paid off or paid down substantially.
No?
If that's no longer true.. then we need to add courses to the curriculum on schools..starting in the first grade because to be contemplating retirement with that much debt combined with problematical uncertainty as to how it will be paid off and retired is.. pretty dumb... IMHO....
When I said folks were waiting for 65 to retire so they could get Medicare.. I was ASSUMING that they'd not be in debt ...
what the heck is wrong with people now days?