Why the very old face a financial doomsday
By Aimee Picchi
July 17, 2013
So much for the golden years.
People over 75 are increasingly in financial crisis, incurring mounting credit card debt while dealing with low interest rates that crush returns on their nest eggs. As Michael Hiltzik in the Los Angeles Times notes, “The facts are sobering.”
Americans over 75 lost almost one-third of their financial assets from 2007 to 2010, according to a study from AARP Public Policy Institute. On top of that, the group is adding on debt. Nearly 22% of people 75 and older carry credit card debt, a rise from 18.8% in 2007.
Part of the problem plaguing seniors is the current financial environment marked by low interest rates, which have diminished the returns for retirees who placed their assets in fixed-rate instruments.
As a result, the 4% rule may no longer hold valid for retirees. That guideline, developed in the 1990s, says if retirees withdraw about 4.5% of their savings every year, their retirement assets should span three decades.