Give us our debts

(This post was updated at 1:35 p.m.)

A lot of attention has been paid to the problem of student loans — and deservedly so. Kids today are coming out of school with tens of thousands of dollars of debt, and declining job prospects. And, as we learned today, this is particularly true in Minnesota where the cost of higher education is well above the national average.

But a study out today from St. Paul-based Securian Financial Group says the same problem is being faced on the other side of the working-years spectrum. More people are going into retirement in debt.

“If you start retirement in debt, the chance of you running out of money is higher,” said Mathew Greenwald, who conducted the survey.

The survey, released this afternoon, says 26 percent of Baby Boomers and 33 percent of the Silent Generation expect to carry non-mortgage debt into retirement. Slightly more than half of current retirees reported they retired with such debts.

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In many cases, according to the survey, consumers don’t even realize they are in debt. Nearly half — 46 percent — failed to classify “at least one common financial obligation such as outstanding balances on credit cards, home equity lines of credit or even overdue utility bills as debt. And 11 percent of people with debt don’t consider themselves being in debt.

  • brian

    The sad thing is, all of this debt is what fuels our economy. If we didn’t have a negative savings rate in this country our economy would collapse. Even our country itself is in debt up to its ears.

    I work in the Pension field so I’ve heard a few discussions on how much we will all need to have saved in order to retire comfortably. Even the best savers among us will be hard pressed to save enough with the rising cost of health care and questionable social security benefits. It’s scary. But not scary enough to put off getting a new TV I guess.

    (I know there are many out there in genuine financial distress that isn’t their own doing. This isn’t directed at them.)

  • c

    You are so polite Brian.

    Simply -we can learn to live simply. We used to do it. My family growing up was considered Middle class.

    I grew up in a 3 bedroom house that was a home for seven people and a dog. We (5 of us) went to Catholic schools. I wore hand me downs….that my oldest brother wore. My bicycle consisted of used parts and it was one groovey-looking contraption. My parents weren’t cheap they were thrifty. We went on one vacation every year, within the state. Oh sometimes we skied in Wisconsin. How did we become a society that needs instant gratification? Commercialism I think is at the root of this evil.

    DDDDooooowwwwnnnnn with advertising.

  • Mark Gisleson

    This isn’t a new story. ’80s grads faced the same problems, and like the current crop were stripped of their rights to bankruptcy by a corrupt federal government that used student loans to enrich private sector lenders.

    I was a displaced factory worker who, by virtue of timing, missed out on every job rehab program of my era. I went back to school on my dime (and loans) and then finished in 1988. The University of Iowa was unable to set up any job interviews for me and 400 job applications later I moved to MN to work for a phone bank at wages that could never possibly repay my student loans.

    After 20 years I finally paid off that debt (negotiating down a $35k debt to $20k on what was originally $7k in loans), but not until after I had received hundreds of ugly, threatening, shaming calls from private debt collectors. Each time I was written off by one, the Dept. of Education would churn my loan, slapping on a four-figure churning fee before reassigning the loan to another predatory collection agency.

    My mistake was in trusting the government and going back to college when I didn’t have the money to do so. No one can possibly pay their tuition on the money you can earn part-time in a college town, so higher education is now spelled D-E-B-T for most Americans.

    Debt deforms lives to an extent far greater than the affluent can ever understand. I would never recommend college to a young person, not unless they can pay for it up front.

  • Joel

    “The sad thing is, all of this debt is what fuels our economy.”

    Please, Brian. Paying copious amounts of our hard-earned money to one or two narrow business sectors (banks and other money lenders) is not what fuels our economy. Having the money in the first place, to spend ALL OVER the economic spectrum, is what fuels our economy.

    I guess my wife and I are among the few who are not in debt (with the exception of our home mortgage), and I can tell you my wife and I do our fair share of helping to fuel the economy. I think that would not be the case nearly as much if we owed everything to lending agencies, where every penny gets compounded. Did I mention we’re in our 20’s?

    Not having so much debt is what allows us to spend money elsewhere.

  • brian

    Hey, I’m with you Joel. I’ve never carried a balance on my credit card (which is rare for a 23 year old) and my wifes student loans are our only debt. Our savings gets us to just about even (cancelling out the student loans).

    I didn’t mean that the interest payments to Banks and credit card companies fueled the economy (although I think the amount of money they make should make people think twice about using their credit cards). A significant portion of our economy is fueled by retail stores (and the making of the things they sell). This part of our economy is fueled to a significant degree by money we don’t have.

    I don’t think this is sad in an inevitable and unchangable kind of way, I think it is sad in an it’s going to be painful to fix kind of way.

  • c

    OUT OF THE MOUTHS OF BABIES

    you guys joel and brian are way too young. just wait until you have tried just about everything, seen just about everything and it becomes much of the same over and over….like fashion. people these days reach for the instant gradification. they seem to be looking for something new and exciting something that is going to make your life have some meaning and a credit card or pretend money give them the means.

    i worked in kitchen design and the kids-couples- in their 20’s would come into the showroom selecting wolf, miele and other high end appliances and high end designs…i want to know just what they do for a living?! they don’t , they borrow. my folks came into the same showroom looking for a small vanity and left empty handed as they thought it was all too expensive and opted for home depot. they are upper middle class to middle class.

  • Brian

    Does that mean that a positive saving rate is going to come back in style?