It is well known that a large senior population has always been part of the Florida demographic. It isn’t as well known that seniors have an extraordinary amount of debt in four of Florida’s major cities compared to all American cities.
- Orlando: $20,945 of median non-mortgage debt; average credit score of 700
- Tampa: $21,085 of median non-mortgage debt; average credit score of 706
- Miami: $23,414 of median non-mortgage debt; average credit score of 704
- Jacksonville: $25,226 of median non-mortgage debt; average credit score of 701
Debt can be a persistent problem for individuals at any age. However, it can be especially burdensome for senior citizens. A heavy debt may prevent you from retiring and can disrupt the comforts of your otherwise peaceful golden years.
It’s not uncommon for senior adults to have tens of thousands of dollars in non-mortgage debt. However, the average debt for senior citizens varies greatly from city to city.
As a result, the information presented was taken from data before the COVID-19 pandemic hit.
They looked at data from a sample of 35,000 individuals between the ages of 66 and 71. Their researchers then calculated debt balances from credit reports taken from mid-2020. The results were compiled and ranked to give us the 50 biggest metropolitan areas with regards to median debt. This includes non-mortgage and other debt types including credit card, automobile, student loans, and personal loans.
Managing debt when you are nearing retirement can be stressful. However, paying off your debt when you are close to retirement during the pandemic can be a nightmare. You may already have other expenses such as medical bills or mortgages to keep up with. This can make your debt feel like an unmanageable burden.
Your social security payments may not cover your debts, so you should follow some debt management strategies before retiring.
People struggling with debt may not be able to afford to pay more than the minimum balance each month. However, this usually means their debt takes a long time to pay off. During this time, they will need to pay interest, which can make the repayment process a lot more difficult.
You should ideally pay more than the minimum balance if you wish to work down your debt. However, this may not be possible in some cases. In such a scenario, you should follow these strategies:
Debt avalanche involves paying off the debt with the highest APR first while making minimum payments on your other debts. You can then focus on the debt with the second-highest APR, and so forth. This strategy helps you eliminate the most damaging debts first.
Debt snowball involves paying off the debt with the lowest balance. You can then focus on the debt with the second-lowest balance, and so forth. This strategy helps you reduce the total number of debts quickly.
You may be able to consolidate your debts to make them easier to manage. This typically involves taking out a large personal loan and using it to pay off each of your debts.
By using this strategy, you can get rid of multiple loans with high-interest rates, and replace them with a single loan with a fixed interest rate. However, for this strategy to work, you should be sure that your personal loan is being offered at a lower interest rate than your existing debts.
Another loan consolidation strategy is to use a balance transfer credit card. These are special credit cards where debtors are not required to pay any interest during a special promotion period. This promotional period typically lasts 18 to 21 months and can buy you more time to pay off your debt.
You can pay off your debts using this card and then slowly pay back the balance without worrying about interest during the promotional period.
You should know that not everyone can qualify for these cards. Card companies require you to have a good or an excellent credit score to be granted a balance transfer credit card. In addition to this, you may also have to pay a balance transfer fee of 3% to 5%.
You should also note that failure to pay off your balance before the promotional period ends will subject you to interest. The non-promotion interest rates on these cards tend to be very high. So you should use this option only if you are confident about your ability to pay off the balance before the promotional period ends.