DreamPictures, Getty Images Letting debt overwhelm your finances is bad news no matter when it happens in your life. But for those 50 and older, it's even more important to rein in the negative side of your balance sheet and get a handle on paying it down while you're still in a relatively strong earning position. Historically, advisors have urged those 50 and older to get their debts paid off entirely before they consider retirement. But the trends in the U.S. show that advice is hardly being followed. The Harvard Joint Center for Housing Studies cites Census Bureau data showing that median debt levels have risen at a much faster rate for older Americans than for other age groups. Specifically, the median debt level for people ages 55 to 64 rose by more than 60 percent between 2000 and 2011, while those 65 and older saw an even more dramatic increase -- nearly 120 percent -- during the same period. The JCHS also observed that among those 65 and older, the percentage of households with mortgage debt doubled to 40 percent in 2010, while among those ages 55 to 64, 70 percent now carry mortgage debt, citing the Federal Reserve's most recent Survey of Consumer Finances. That's not the direction you want finances going. As your future earnings prospects dwindle, it's more important than ever to get debt under control. With that in mind, here are four things that those 50 and older should consider. 1. Insure Against Your Biggest Financial Threats. For younger people supporting families, life insurance coverage is an important way to protect against unforeseen tragedy. But even though life insurance can still play a role for those 50 and older, the bigger financial threats are those that will leave you facing major long-term medical expenses. Maintaining health-insurance coverage throughout your career and adding supplemental insurance coverage to Medicare when you're eligible will go a long way toward preventing massive medical bills from eating away your savings. Moreover, looking into long-term care insurance as you head north of 50 can help you avoid the financial damage that paying out-of-pocket for skilled nursing care and other specialized health care can cause. With Medicare and most health insurance providing only limited coverage for long-term care, a separate policy is worth considering to further reduce your financial risk. 2. Understand Your Debt-Handling Options. Older Americans have access to some debt-management products that others don't. The most popular is the reverse mortgage, which allows you to tap the equity in your home without the same risks of a conventional mortgage or home-equity line of credit.
Sunday, August 25, 2013
4 Tips to Help the 50-Plus Crowd Manage Their Debt
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