Over 50's Struggling with Debt

Over-50s struggling with higher debt, survey shows

ROMY UDANGA

















JOHN SELKIRK

TIGHT TIMES: Nearly a third of Kiwis aged 50 years and older expect by the end of the June quarter to have higher debt levels and to struggle to pay what they they already owe.  The finding is among key results from the latest Dun & Bradstreet Consumer Credit Expectations Survey released yesterday.

A total of 27 per cent of people over the age of 50 expect higher levels of debt compared to only 19 per cent average across the whole population. Another 30 per cent in the same demographic expect problems meeting their credit commitments - money they already owe - in the next three months compared to an average of 28 per cent for all age groups.

The 50-years plus segment of the population is a demographic many expect to be more in the reducing debt phase, but Dun & Bradstreet general manager John Scott said these people "are being constrained" as the impact of the global financial crisis and the economic challenges in the last few months "continue to reverberate" in New Zealand.
"I think people, particularly in that older age group, are not earning as much as they used to. With the general cost of living going up, they are finding it hard to manage their expenses," Mr Scott said.

The household level of indebtedness at 150 per cent of gross annual consumption remains high and is putting financial pressure on the population, the 50-plus segment in particular, he said. "People have not been paying debt down over the years. Now, when they look to refinance, which they were historically able to do, they can't because they can't afford to take on debt. "People's ability to effectively keep going on the debt merry-go-round has been stopped, and now they have to face the music."

The survey also revealed more than a third of Kiwis (34 per cent) say they will use their credit cards to cover otherwise unaffordable expenses like holidays, home improvements, cars and TVs during the next three months. That figure jumps to 56 per cent for people living in Christchurch, and to 47 per cent for people aged 18 to 34.

The study did not break down the spending by category, but Mr Scott said it shows many Kiwis are using credit in ways that may eventually lead to trouble. "Future interest rate rises later in the year may be the trigger that causes distress for many households."

A total of 43 per cent say a rise in interest rates will have a negative impact on their finances. In spite of this, 27 per cent intend to apply for a new credit facility, including credit cards, and to make a major household purchase.

As one person commented on BusinessDay.co.nz - ''It's not the borrowing, it's how we're borrowing. Creditaholics Anonymous anyone?''

- BusinessDay.co.nz