Depression-era seniors struggle with debt

By Eileen Alt Powell
AP Business Writer

NEW YORK America's seniors, who weathered the Great Depression or grew up in its shadow, have a reputation for frugality and saving. Of all generations, this was the one that got it right by pinching pennies, avoiding credit and putting money away for retirement and to pass on to their children.
Yet an increasing number of older Americans find themselves deep in credit card debt or even filing for bankruptcy troubles more associated with their baby boomer children and grandchildren.

The reasons vary, but experts say some retirees are overwhelmed by rising medical expenses or find that Social Security and their pensions don't stretch far enough. Those who lost jobs before they were ready to retire never quite caught up.

Dollie Hawkins, an 84-year-old retiree living in Miami, dates her financial problems to 1982, when she lost her full-time nursing position. Hawkins, a widow, said that as bills "began to crowd up on me,' she turned to credit cards and ran up some $11,000 in debt. She's trying to pay it down, if slowly, from her Social Security benefit and meager savings.

"Sometimes I wished I could have walked away from it, but I wasn't raised that way and I feel responsible,' Hawkins said.

The rapidly rising cost of health care is also clobbering some seniors.

Stuart D. Zimring, president of the National Academy of Elder Law Attorneys, said he's seeing more older couples who get into financial problems because "cash flow is not keeping pace with the cost of living, particularly the cost of health care.'

And because seniors are proud of their independence, they often try to hide their financial distress.

"In most cases, the kids don't know what's happening until the crisis occurs,' said Zimring, whose practice is in North Hollywood. Just how big a problem is elder debt?

A study by Harvard University's Consumer Bankruptcy Project found that the actual number of seniors filing for bankruptcy is still quite small. In 2001, just 82,207 bankruptcy petitioners or 4.6 percent of the total 1.8 million were 65 and older, the study found.

Still, it was the fastest growing group of petitioners, the Harvard study said.

A separate study by Demos, a New York-based think tank, found that seniors over age 65 were carrying an average of $4,041 in credit card debt in 2001, nearly double the amount reported by seniors 10 years earlier.

The Demos analysis also found that the newly retired those 65 to 69 were carrying nearly $6,000 on their cards, triple the level of a decade earlier.

Tamara Draut, of Demos, blames "weakening of the three- legged stool' that elders are supposed to rely on Social Security, pensions and private savings.

Seniors often find their Social Security income reduced when a spouse dies. Fewer workers get traditional pensions, and many retirees have seen companies cut back their pensions or health-care coverage. Savings, meanwhile, took a hit during the 2000-02 bear market on Wall Street or weren't large enough to begin with.

Seniors also have succumbed to the siren song of easy credit.

That's what Dale Gravelle, a 67- year-old nurse from Attleboro, Mass., says happened to her.

Gravelle said she used to pay cash for everything but then started using credit cards.

"I had too many cards, and I got in deeper than I thought.

"I would advise people, especially if you're older ... not to rely on credit,' Gravelle said. "Relay on good, old-fashioned cash and maybe a debit card for some bills.'

Howard Dvorkin, president of Consolidated Credit, said he's seeing an increasing number of seniors with debt problems.

"They are not people with lavish lifestyles, they're trying to live within their means,' he said. "But Social Security isn't cutting it for most folks.'

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