Life after 60 can revolve around retirement – but that’s not the only financial challenge that’s likely to come up.
Many older consumers also have problems coping with debt payments, understanding their loans and recovering from financial scams, among other issues, according to a new report from the Consumer Financial Protection Bureau. The federal consumer watchdog analyzed the 103,000 consumer complaints it has received from people 62 and older since the bureau was created in 2011 to highlight some of the most common complaints.
Here are some of the most common financial struggles affecting older consumers, according to the report and discussions with financial experts.
— Trouble keeping up with debt payments. The move to fixed income in general can make it more difficult for retirees to cope with debt payments, be it a mortgage, student loans or credit card debt, says Mike Sullivan, a personal finance consultant with Take Charge America, a national nonprofit credit counseling and debt management agency. “Debt puts a huge strain on the budget,” he says, adding that some seniors are carrying more debt into retirement after years of helping children and grandchildren.
Some seniors turned to credit cards after facing an unexpected financial shock, such as a large medical bill, the CFPB report found. In other cases, consumers may be dealing with a relative who is piling purchases on to their credit cards, Sullivan says. Seniors should contact their lenders as soon as they think they may start to fall behind on payments, he says. Some people may be able to have their loans adjusted. A credit counselor may also be able to help them come up with a budget or to remove another person’s name from the account, he adds.
— Complications with reverse mortgages. Homeowners taking out reverse mortgages – which allow consumers to sell their houses to a bank so that they can tap into equity in their homes – are still required to keep paying property taxes and homeowner’s insurance. People who fall behind on those payments may be at risk of facing foreclosure and losing their homes, according to the report. This situation can come up for seniors who struggle to keep up with monthly bills because the income they receive from the reverse mortgage is less than expected, says Jean Setzfand, senior vice president of programs for AARP. That’s why she recommends that reverse mortgages only be considered as a “last resort,” she says.
— Difficulty recovering from scams or identity theft. Older consumers are “preyed upon more frequently” because they have money and may become more vulnerable if they have dementia, Setzfand says. Seniors also frequently filed complaints if they had a hard time correcting errors on their credit report or disputing unauthorized purchases on their credit cards, according to the CFPB report. Many consumers said in the complaints that they weren’t sure about which steps they should take to find a solution. Consumers should check their statements regularly to scan for unusual charges, says Stacy Canan, of the office for older Americans for the CFPB.
— Confusion over banking products and fees. Many of the complaints filed by older consumers were related to confusing charges on their bank and credit card statements. In some cases, consumers spotted subscriptions or services that they don’t remember signing up for, a sign that they may have been enrolled in unwanted add-on services when opening an account, Canan says. Other times, consumers had a hard time understanding how interest charges worked on their credit cards, according to the report. The findings are a reminder that consumers should check their statements regularly to look for unusual charges and to make sure that their cards are working as expected, Canan says.
— Challenges managing finances after the death of a spouse. The loss of a spouse can create financial challenges for the surviving wife or husband, particularly if that person was not used to managing the finances, Canan says. Many of the older consumers filing complaints with the CFPB said they had difficulty gaining access to certain assets, such as savings accounts, even after providing the necessary documents. Some people who had taken out reverse mortgages also had trouble staying in their homes if the agreement was in the deceased spouse’s name, according to the report. Some consumers said they faced the risk of foreclosure in cases when loan servicers took a long time to respond to those requests, the study found.