Generation Y may have the reputation for spending right into a bind, but their grandparents and soon-to-be-retired parents are catching up.
More and more, seniors are entering retirement with existing debt or taking on new debt after leaving the work force, experts say.
Today's seniors, and the first wave of baby boomers entering early retirement, are used to carrying debt. They've spent years paying installments on revolving bills like credit cards and mortgages.
They're so used to living well, they seem to keep spending at high levels, even after steady salaries are replaced by retirement income typically 30 percent lower than they brought in as workers.
And an increasing number of retirees, who face rising costs for health care and other services, also are paying bills for their adult children and, in some cases, grandchildren.
Added up, it's a worrying combination, financial experts and bankruptcy attorneys say. They're seeing an increasing number of retirees with heavy-duty debt seeking help to solve their problems.
"The problem that the senior citizens have is if they get into a financial pinch, they don't have the ability to go back in the work force, necessarily, and take care of the problem," said Neil C. Gordon, a bankruptcy attorney with the Atlanta firm Arnall Golden Gregory.
And sometimes that financial pinch can become a major crisis leading to turmoil, said said Suzanne E. Boas, president of Consumer Credit Counseling Service in Atlanta.
The usual triggers: death of a spouse, unforeseen emergencies, medical problems, and the rising costs of medicine, housing and utilities. Some seniors are financially supporting their adult children or taking care of their grandchildren, Boas said.
Plus, people are living longer, but they're not squirreling away enough money for the future.
The average American who today is 60 can expect to live to about 82, and the average 70-year-old can expect to live to 85, according to the Atlanta-based U.S. Centers for Disease Control and Prevention.
Increasingly, people are paying for retirement-age expenses by borrowing.
Sixty-one percent of Americans over 50 carried some debt in 2001, compared with 57 percent in 1989, according to the Federal Reserve Board's 2001 Survey of Consumer Finances, the most recent figures available.
The figures are more sobering for seniors 75 and older. In 2001, 29 percent carried debt, compared with 21 percent in 1989.
"Over the last decade, we've seen a gradual aging of debt," said Boas, whose agency conducted 65,000 budget and credit counseling sessions last year and is seeing more seniors.
Gordon, the Atlanta attorney, sits on the board of the National Association of Bankruptcy Trustees. He said seniors make up no more than 2 percent of the roughly 1,200 cases he handles a year – but their numbers are growing.
The trend is playing itself out nationwide, attorneys say.
"They're older, they're sicker, and they're further behind," said Morton A. Faller, who heads the bankruptcy and creditors' rights group at Shulman, Rogers, Gandal, Pordy & Ecker, a Rockville, Md., law firm. His firm has seen a 20 percent increase in the past few years of older people coming in to seek help with their debts.
"They're more likely to be on fixed incomes, and their expenses are not staying within the annual growth of their incomes," Faller said. "They're going into a hole."
More seniors are heading into retirement still paying down a mortgage or taking out home-equity loans. Roughly 30 percent of seniors now owe on their homes, compared with 20 percent in 1980, according to the Demos organization, a New York-based public policy group.
The rising debt comes amid increasing calls in Washington to change Social Security – government-supported income for seniors and the disabled. It also coincides with companies' move away from guaranteed retirement pensions in favor of less expensive but more volatile options like 401(k)s.
"Today's seniors have a lot of economic pressures on them as they head into retirement, including paying their mortgage," said Tamara Draut, director of Demos' economic opportunity program. "People who are in retirement are living in the red, and as the baby boomers start to retire, it seems like they're not on track in terms of retirement savings."
Brenda Mott, a 57-year-old retiree in southeast Georgia, puts herself in that category. She retired in 1996 from her job as a secretary because of health problems. Her husband, a 59-year-old career Army man, retired the same year.
While they have his military health benefits and pension, the Motts, who live in Ellaville, don't have much in the way of savings.
"We've been wanting to save for a long time," she said. "But financially we just couldn't. It seemed like the living expenses took everything."
In February, they had some cash left over, and her husband, who mows lawns during the summer for extra money, opened a savings account for them.
"We should've put a lot of thought to a lot of things earlier in life, which we did not," Mott said, adding she'd like to rejoin the work force but her health problems won't permit it. "I've kind of put my trust in the Lord."
Faller, the Maryland bankruptcy lawyer, says he sees many such seniors with what he calls "the cross-your-fingers-and-hope-that-a-rainy-day-never-occurs syndrome."