Why Debt is Holding Older Australians Back
As the cost of living continues to rise, debt is an ongoing concern for many Australians, including the most well-established amongst us. New research from Debt Rescue revealed that Australians over 55 see debt as a major inhibition in their lives more than in any other age group.
The assumption that those aged 55 and over are most financially secure falls down when a handful of vital factors are taken into consideration.
Nothing is free in this world, including your life after retirement, and many seniors are facing the struggle of insuring their futures financially. For those who haven’t collected enough in superannuation to support their preferred lifestyle, any lingering unpaid debts could become a major obstacle.
The rising cost of living also factors in, posing the question of whether the contents of your superannuation fund will be enough to outlast you. Paying off extra debts while supporting a relatively comfortable lifestyle could prove difficult to handle.
As we grow older, medical bills are bound to become more frequent and costly - just another potential bump in the road for your precious superannuation. It may not be an easy road after 55; according to Budget Direct, although we’re living longer, we’re not necessarily healthier. “Lifestyle diseases” become a larger cause for concern in later years, and even if you’re not hit by any nasty surprises, Forbes contributor David Rae says retirees-to-be are underestimating just how much health care will cost in their golden years: “The average 65-year-old couple retiring this year will need about $280,000 to cover healthcare in retirement,” he says. This extra cost isn’t covered by Medicare, so it’s easy to see why older Australians might be concerned about future trips to their local GP, especially if they have other debts still looming.
Supporting your children in every way possible, including financially, is part of becoming a parent, but it doesn’t stop there. Once those children have children, the need to give of your time, support, and financial aid, can increase dramatically. The Herald Sun published an article last year discussing the burden grown children can place on their parents, saying retirees-to-be are expecting their debts to outlive their working lives. This is a fact of life as living becomes more expensive and families need more support. What’s more, the pressure to leave a financial inheritance behind for your children also factors in, a trend which would be impossible to follow if your debts are still following you.
Many older Australians might be planning to finally take their dream holiday after their working days are over, but it may not be as easily done as you hope. Avid travellers and retirees Pat and John Martin were featured in an ABC News article on their impressive travel habit, and although they say it is possible, it does come with a condition: “make sure you have absolutely no debts”. In other words, retirees who catch the travel bug will find debt a major roadblock in the way of their plans. Getting out of your old way and into another country requires plenty of pre-retirement planning, and even then, you could find yourself strapped for holiday cash if you’re still covering off old debts and expenses.
Loss of a Partner
Losing a life partner is a huge challenge to face, not only emotionally, but also financially. There are many extra considerations once you have become a single-income household, including the need to take over the household bills, budget, insurance, and responsibility for any cards and loans. Extra debts only add fuel to the fire and transform what is already a taxing time into a potentially unmanageable situation.