Older Australians retiring in debt

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Saving money to fund a comfortable retirement continues to be more difficult for the current generation of older Australians. A recent survey of more than 1000 Australians undertaken by finder.com.au, reveals that older Australians are carrying higher levels of debt into retirement than their parents did at the same time of their life, with adult children staying at home longer being a major contributing factor.

More than 37 per cent of older Australians told the survey that they are carrying significant debt. Michelle Hutchison from finder.com.au said these findings suggest that many Australians are under a misguided impression that they will be debt-free by the time they retire, but, currently, they may not be spending their money sensibly enough to ensure this will happen. The reality is that many Australians will never be debt-free in retirement, or ever for that matter, and that older people should also expect this outcome.

As a result of this study, Ms Hutchison believes that Australians need to be more conscious about repaying debt before they reach retirement.

Read more at The Age.

Opinion: The debt generation

With interest rates hitting record lows this year at two per cent, compared with 17.5 per cent in January 1990, you would expect it to be less difficult for Australians to repay their debts. But the reality is significantly different to this expectation, with credit card companies slugging customers between 17 to 21 per cent interest per annum on debt, and an increasing number of Australians falling over themselves to accept enticing credit card offers instead. 

What ever happened to the days when you either had to save up the money to buy an item or you simply went without? While there is a growing concern for the increase of older Australians entering retirement with debt, the greater fear must be for future generations who also seem to be even more inclined to spend money they don’t have.

With 53 per cent of Australians currently living in debt and one in 10 believing they will never be debt free, the ability to borrow high amounts of money at the interest rates offered should be questioned, especially for older Australians who are transitioning from a full-time wage to no wage in the next 15 years.

What do you think? Are Australians addicted to credit cards? Should there be as stringent measures in place for credit cards as there are for traditional lower interest rate loans? Should the system protect the consumer from falling too deep into debt? How does this affect you?

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Written by Drew

Starting out as a week of work experience in 2005 while studying his Bachelor of Business at Swinburne University, Drew has never left his post and has been with the company ever since, working on the websites digital needs. Drew has a passion for all things technology which is only rivalled for his love of all things sport (watching, not playing).
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141 Comments

Total Comments: 141
  1. 0
    0

    I am debt free and have only ever had so-called ‘good debt’, debt used for investment where the returns were worth it to go into debt. I believe the key is better education. The banks love ignorant customers who are buying their credit. We should learn in school how the banking system works and how to use debt and how to manage our financial affairs through life to best effect. Unfortunately that is not in the interest of ‘big business’ nor the banks who profit from ignorance. The government is unlikely to push education in this area when they are funded by and ruling for big business. So maybe volunteer teachers could fill the gap?

    • 0
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      Unfortunately some people want to keep up with the Jones even if they can’t afford to and that’s the main reason for debt. Stop showing off people.

    • 0
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      Am trying to get a programme up and running called ‘Money Wealth & Happiness’. Its aim is to educate older schoolkids and school leavers/uni students as to what money really is, how the financial system works and how to utilise it to your best advantage, and why the Banks are not your friends.

      Will be interesting to see how much opposition it generates!

    • 0
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      Ronin, I just hope that you don’t get bumped off by the bankers so don’t go out after dark.

    • 0
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      Being able to control even good debt is not achieved just through education but requires a complete change of mindset. I love my credit cards and flexible mortgage as they make me money not to mention all the free flights and accommodation etc I get as well. Debt is like fire a great slave but a bad master. My current debt levels are quite high but it doesn’t worry me especially with such low interest rates.

    • 0
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      My my, you do contradict yourself, Bonny! One minute you are receiving high investment returns and have plenty to retire on without a pension and the next you have high debt levels???? You’ve given the game away, it seems.

    • 0
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      My Bonny lies over the Ocean..
      My Bonny goes BLOOP BlooP BLOOP OoOoOo 🙂

    • 0
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      I totally understand what you mean Bonny.

    • 0
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      Ha ha why can’t I have it both ways. Shortly I will once again be free of debt and it will be time to finishing emptying that bucket list.

    • 0
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      As long as your assets far outweigh your debts, you can rest easy. You can’t take it with you once you’re gone.

  2. 0
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    I often wonder how surveys arrive at the figures they come up with, I am approaching my 70th birthday, we have only ever been a single income family, the only real debt we ever had was our home mortgage which we paid off as soon as we were able, our home is very modest about 13 squares, we have never had a credit card or store cards, we have always lived within our means, and now we are enjoying a great retirement. I have to wonder how other people get into so much debt, I do see people driving around in petrol guzzling cars and 4 wheel drives so are people living way beyond their means or have I just been extremely lucky, It is not my intent to criticise other people and the predicament they find themselves in, we can’t always know other peoples circumstances. The survey results seem to me to be quite high for older folk to be in so much debt when they retire. I guess I have to thank my wife and my lucky stars for our situation.

  3. 0
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    We retired with no debt. However we are still living in our very modest weatherboard house which we purchased not long after we married. Our friends and family have debt and grander houses – who is ‘right’?

    • 0
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      Sounds a bit odd. So what happened to a lifetime of income?

    • 0
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      You are right, we are much the same, bought our home in 1967 and still living in it, no debt, most of my friends are in the same boat, must be something about the era we were born, I know not everyone is in the same boat as Us and quite often the cause was beyond their control, but I’m equally sure that many people didn’t take care of their finances when working and are all the worse off now, you can only spend your money once unfortunately.

    • 0
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      Not another one with HIGH WAGES and NO MEDICAL BILLS and assorted other non Misfortunes of life ? Surely !!

    • 0
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      Achieving a comfortable retirement is a lot more than “high wages”. You mentioned a few but missed the hard work (including when other Australians are off having fun), denial, persistence and finding reasons not to spend the dough you have. Not many can hack that list…but it does lead to a good place later in life….as long as health is with you. So far so good mate.
      Sorry that you have drawn the short straw particolor.

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      It is not the amount you earn; it is how you manage it.

    • 0
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      No short straws here Mick !! I was having Sympathy with others ! 🙂

    • 0
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      Empathy is a wonderful quality. “I like the boy…”.

  4. 0
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    We have debt currently but hopefully will be able be debt free when we retire. Downsizing to a small home is the way to go for us, and a move to the country. It’s very tough out there in the “real” world and I feel very sorry for people who have this problem. We came back from almost being bankrupt so I am feeling blessed.

  5. 0
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    You are missing the point about societal change Drew. What you are talking about (saving) belongs to the good old days and few people these days save for anything; not even the family home….which many genYs have the expectation of buying with zero deposit. As for credit cards…well are considered to be ‘free money’ with little thought as to repaying the debt on these before interest cuts in.
    Whilst I have to admit that I have always been on the conservative side and always hated and tried to avoid debt this mentality has got me in the past when inflation was high and saving meant going backwards as asset prices took off. But now my wife and I live in relative comfort and, whilst we still have occasional money concerns, we can afford many things which others struggle to achieve. BUT WE HAVE NO DEBT and OWN OUR OWN HOME. That is the key to getting on without having to be on the social security bandwagon.

  6. 0
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    I have had two debts in my life and they were many years ago. My house and my first fridge. Both were paid off long before time. I just hate debt. I have always saved. My children tell my they are struggling then buy luxury items. I don’t think younger know the difference anymore.I have a credit card. It costs me nothing. I have never paid interest becouse I transfer money into the credit card as soon as I’ve made a payment.

  7. 0
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    I retired with no debt, owned our own house and our two cars. We both have and use credit cards but pay them off each month, normally. In the past we used debt to finance various item we needed, not wanted but needed. The plan was always to retire debt free which we did.
    In current times our capitalistic system demands ever increasing consumption to ensure ever increasing profits. This leads to high pressure advertising which includes product placement in popular TV shows and movies.
    Younger generations have never had the education, be it at home or at school, that gave them an appreciation of the fact that borrowings must be paid back and the sooner the better. This tends to leave them at the mercy of the sharks of business, particularly banks, with on-selling at the point of sale etc.
    The answer has to be education but where? The parents of the youngest generation are the biggest spenders.

  8. 0
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    Mick

    What happened to our lifetime of earnings? We lived and had children ????

  9. 0
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    I’m moving to Thailand for a better life, won’t waste my time in tax city

    • 0
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      Not a bad idea. Many are. Hope you like heat, humidity and corrupt police. Enjoy!

    • 0
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      Just a little snippet I saw online that may be of interest re retiring overseas.

      “Previously, this rate change did not occur untiil a pensioner had been outside Australia for 26 weeks. However, in the 2015 Budget the Government announced that some pensioners will now have their pension rate reduced if they are absent from Australia for more than 6 weeks. After 6 weeks absence from Australia, pensioners who have lived in Australia for less than 35 year,s will be paid a reduced rate of benefit proportionate to their Australian residency based on their AWLR . Pensioners with more than 35 years AWLR will not be affected.

      Alternatively, you can make a claim for a pension without returning to Australia, if you are living in a country with which Australia has an International Social Security Agreement.

      Finally, one issue that many people overlook when considering retiring overseas is access to health care – international health insurance, particularly in retiree age groups, can be very expensive. And you cannot just rely upon going home to Australia when the need arises – if an emergency develops and you need to be evacuated to Australia at short notice it may cost $100,000 from some destinations.”

  10. 0
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    Having been a supporting parent on a single income for many years, I have, through living within my means and working hard to maintain a roof over our heads and providing the necessities with a little affordable luxury thrown in, retired at 59 yrs old debt free 14 years ago and still live modestly and comfortably.

    Sadly, I tend to agree that people need to live their life within their means instead of creating an image and trying to keep up with others that are in a more affluent position for whatever reason.

    In saying that, there are cases where unfortunate health circumstances or other family issues out of their control have maybe created a situation leaving some in a less that fortunate financial / housing situation and for those I feel deeply for them in having been dealt unforeseen blows throughout their lifetime.

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