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More seniors pile on debt to help their family

Emotions and money are a complicated pairing in any case. Throw in the parent-child relationship -- also sometimes complicated -- and you've got real problems. Turns out, senior citizens are racking up debt to help pay for stuff their kids want and kids are digging themselves into a hole to give their parents a hand -- and it's a mess. Carmen Wong Ulrich is a personal finance journalist and author of "The Real Cost of Living" who wrote about this issue for the New York Times.

"It's recently historically gotten very bad. There was a survey by Demos and AARP, they found that the average credit card balance for folks over 50 is now bigger than for folks under 50 by about $2,000. This is the first time that that's ever flipped. It really says a lot about what's going on with that generation," says Wong Ulrich.

One of the reasons that seniors are going into debt is because many of them are helping family members. The report found that nearly a quarter of folks over 50 gave money to or paid the debts of relatives by adding to their own credit card balance. But that's both adding debt to the younger generation and making things worse for the older generation, too.

"Every generation is going deeper and deeper into debt and the younger generations are helping the aging parents who are in trouble. But a lot of the thought process behind the how and why this kind of happens -- with this generation in particular -- and I've talked to psychologists about this, there's a lot of loneliness; there's a lot of guilt for making their children, they want their children to have a better life than they had. So their children's expectations are not being managed. The grown children say, 'I need my wedding paid for,' 'I need college paid for.' All of these things at the same time when we have seniors hit at the same time by a bad economy and bad market."


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Wong Ulrich says one reason that some seniors wind up with debt problems and other don't has to do with their mindset. Culturally-speaking, Wong Ulrich says that the first generation of seniors to have easy access to credit may end up becoming super consumers who accumulate a lot of stuff over time. Moreover, seniors are guilted into giving a better life to their children without realizing that they may be enabling their kids to not work for themselves or learn the value of money.

One of the surprising findings about this debt-ridden generation of older seniors is that they are children of people who grew up during the Great Depression, says Wong Ulrich.

"You see these kids of Depression-era parents who really went the opposite direction. Part of it is, after the Depression and after -- especially the '60s -- what we saw was this 'You can have the better toaster,' 'You can have a better car.' There was a lot of needing to upgrade. It's the first generation of "Keeping up with the Joneses." But then you add to that, in the '80s and '90s, easy access to credit and also a great housing market for a while there. And you have an ability to basically live well outside of your means," says Wong Ulrich.

Wong Ulrich advises seniors whose kids want them to go into debt to take care of themselves first. "It's up to you to say, 'You know what, if I do that and dip into my retirement, I might have to possibly move in with you.' Something tells me they may back off a little bit if you put it that way," she says.

Wong Ulrich says to end the cycle, seniors need to develop a plan that you can stick to in order to get rid of the debt, to be able to say no, and even get support from your community. If most of the trouble comes from helping family members, she says you need to go outside the family for support -- like meeting with a nonprofit credit counselor or a financial planner.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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