How Baby Boomers Stay Free of Credit Card Debt
Written by
Heather Taylor
Edited by
Gary Dudak
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Most baby boomers aren’t in any credit card debt.
Key findings in a recent GOBankingRates survey revealed that 52% of Americans ages 65 and older said they had no credit card debt at the time of the survey. Additionally, 53% of Americans ages 65 and older said they had not added any credit card debt over the six months prior to the survey.
Other generations may see statistics like these and wonder what’s in the boomers’ secret sauce. The answer, as several financial professionals told us, revolves around using certain strategies to stay debt-free.
Budgeting
Boomers who have, and consistently stick to, a monthly household budget are much more likely to avoid accumulating credit card debt compared to those who do not budget.
Howard Dvorkin, chairman at Debt.com, said this approach is similar to dieting, in which a dieter is able to lose weight by burning more calories than they eat. Those on budgets are counting their dollars and cents. As a result, they are able to spend less than they earn.
One positive trend Dvorkin has noticed among baby boomers is they are comfortable budgeting in traditional formats and via budgeting apps.
“They’re not usually the type to download the latest hot app, but they have become more comfortable with online budgeting programs that safely do the heavy lifting for you,” said Dvorkin. “Many banks and credit unions are also getting in on the act, offering many budgeting tools on their websites. There’s literally no excuse for not budgeting — because a computer will do the math for you.”
Following a Financial Plan
Another helpful strategy that keeps many baby boomers from getting into credit card debt is that they follow a financial plan.
Erin Voisin, managing director of wealth management services and partner at EP Wealth Advisors, said many boomers focus on maintaining their way of life in retirement without depleting the assets they saved up.
When they work alongside a financial professional to develop a financial plan and consistently review it, Voisin said it allows them to budget appropriately and live within their means to achieve their desired retirement.
Utilizing Additional Income Sources
Baby boomers tend to understand that they have to get out of credit card debt as quickly and efficiently as possible if they want to stay out of it. However, getting out of debt takes more than good cash flow, according to Brian Kuhn, CFP and SVP, financial advisor at Wealth Enhancement Group.
Baby boomers may use any additional income source available to them to speed up paying off lingering credit card debt. A few income sources beyond Social Security or the pension received in retirement may include severance checks, inheritance money or leftover proceeds as the result of a move.
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