The golden years aren’t so golden for increasing numbers of Americans fifty years and older. The American Association of Retired Persons reports that three million older Americans are staring down the dark tunnel of foreclosure.
The foreclosure rate among this age group has increased to nearly ten times what it was only five years ago (2.9% in 2011 vs. 0.3% in 2007). Three and a half million people 50 and older are underwater on their mortgages.
For those aged 75 years and older, the median mortgage balance has nearly quintupled over the past twenty years ($52,000 in 2010 compared to $11,800 in 1989). Factoring in inflation, this is still 2.5 times higher. Nearly a quarter of people aged 75 or older carry a mortgage.
Many will need to go back to work
The independence that was once sought in retirement may no longer be possible for many older Americans. The average fifty-year-old has saved only around $44,000; getting to anything sustainable is a huge game of catch-up that is only made worse by large mortgage payments.
It might not be too far out of the realm of realism to say that retirement is an outdated notion. Upon arrival of “retirement age” there’s either enough money and/or income to survive without holding down a job, or there isn’t. Best to plan to retire into another line of work rather than retire out of one.
Barring the ability to work, though, if an older person can no longer live in their home because it’s been foreclosed on, then someone has to pick up the slack. Either the family pays (by taking the person in) or we all pay when the government steps in. Either way, it’s not the best outcome.