Older Americans are spending too much on mortgage debt and credit cards, according to a new report from the nonprofit National Center for Policy Analysis (NCPA). In 2012, interest payments made up 4.3 percent of overall expenditures for Americans aged 65 to 74, up from 2.7 percent in 1990. For those 75 and older, it rose from less than 0.7 percent of expenditures in 1990 to 2 percent in 2012.
The NCPA reports that the average credit card balance for 65- to 74-year-olds in 2010 was $6,000, compared with just $2,100 in 1989. Seniors generally tend to spend most on housing -- which includes maintenance, property taxes, insurance, and mortgage interest. Housing represents 32.8 percent of expenditures for 54- to 74-year-olds, but that share climbs to 36.7 percent for those age 75 and older.
Financial experts recommend that older consumers take time to get a sense of their expenses and determine how much they spend on housing, credit card debt, healthcare, and transportation. Those who have not done so already should create a plan to pay expenses in case of an emergency, or if things do not go according to their existing plan. Consumers also should establish a debt-reduction strategy. Both pre-retirees and retirees must factor inflation into their spending plans, using the Consumer Price Index for the elderly.