New numbers show that people in their 60s are carrying very significant debt without much in savings.
The Federal Reserve Bank of America reports Americans of all ages owe over $11 trillion. While you’ve heard me in recent months say that’s a big improvement, it’s still double what we owed 12 years ago. And unfortunately, many of those who did the borrowing were middle aged and they’re now moving into what would normally be retirement age while facing a lot of debt.
Four in 10 people entering retirement age now have mortgage debt, according to the Fed’s numbers. Sometimes I’ll take a call from someone in this situation, and you’ll hear me ask a number of questions. Then I’ll advise them they shouldn’t pay off the mortgage because they can’t eat their house. There are situations where if you’re on the cusp of retirement, it’s not a practical idea to pay off a mortgage.
But when we have four in 10, and then maybe they can’t retire, well, we got some problems!
Historically, people worked until they died or couldn’t work anymore. The concept of retiring is a very modern idea. I just talked to somebody who says he loves to work and will work until he can’t find the office anymore. While that’s not my attitude, I respect his passion.
By saving money during your working lifetime, you create the freedom and choice that a lot of others don’t have. Even if you love what you do, you have the freedom to decide if you want to continue doing it. That’s the advantage of not being in debt.
For some people who are on retirement’s door, it’s already too late and that means they keep working. But if you are younger, take this example and think about saving during your working lifetime to create choice and the opportunity to do what you want to do. If that is to keep working, that’s your choice, not a choice made for you by the debts you have or the money you haven’t saved.