Credit Repair and Aging: How to Retire Comfortably

A study conducted by the Pew Research Center shows good news for recent retirees, reporting that adults 65 and older now have 42 percent more in median net worth than their 1984 counterparts. As Americans battle inflation, unemployment, and low credit scores, is it possible for future retirees to follow suit?

Although the Pew Research Center shows favorable results for the nearly and already-retired, the future is not looking as bright for Americans under 35. The same study reported that this younger group possesses a median net worth of $3,662, nearly $8,000 less than the same age group in 1984. What distinguishes the Silent Generation from Generation Y? There a few defining factors, including:

  • Post-war spending habits. Earning money after World War II was often more about putting food on the table than about acquiring luxury items. For that reason, many families taught their children to pinch pennies from an early age. As these same children grew, their propensity to save as much as possible reduced the financial risks associated with debt accumulation or credit score damage.
  • Lack of credit card debt. The first national U.S. credit card wasn’t unveiled until the early 1950s, long after the Silent Generation had established conservative spending habits. While millions of people have since joined the world of credit, retirees tend to use their limits sparingly, reducing the need for credit repair and protecting their credit scores in the process.
  • Lower education costs. University tuition isn’t what it used to be. Past generations enjoyed more affordable options without the financial stresses of exorbitant fees. Lack of student debt helped the retirement set focus on life’s expenses more quickly.
  • Greater home equity. Despite the recent housing market crisis, home equity prices have actually improved since 1984. Families who invested wisely in real estate early on reaped the benefits of this shift, adding to their bank accounts and improving their retirement options.

So, what lessons can younger Americans learn to ensure easier retirement?

  • Pay off debt. Comprehensive credit repair includes debt reduction—the sooner, the better. Retirees depend on a positive bank account balance to provide security. If you are drowning in debt, your chances of achieving the Silent Generation’s results are dismal.
  • Invest in your future. Although the Silent Generation’s trust in banking was shaky, the advent of the Federal Deposit Insurance Corporation (FDIC) reestablished some faith. So take advantage of your employer’s 401K matching policies and other available investment vehicles. Buy a home in a growing neighborhood where values are expected to increase. The bottom line: help your money grow ASAP. Time can make all the difference.
  • Tighten your wallet. Retirees require an estimated 80 percent of their last working income to live each year. Find ways to save now by focusing on what you need rather than what you want. Create a monthly savings budget, and stick to it. Early planning can help you retire more easily down the road.
  • Be careful with the “extras.” While a college education is valuable, its cost could put you into deep financial trouble. Assess the situation before relying on student loans. How quickly will you be able to pay for school? How will that burden affect your other responsibilities? To cut costs, consider attending community college before transferring to a 4-year school. Adopt this mindset for all major purchases, and look for ways to save. The added attention will put less stress on your bank account and help you maintain a healthy credit score.

While members of Generation Y may have experienced more comforts during their lifetimes, it’s clear that the Silent Generation has benefitted from good financial habits and careful spending. Pay attention to their example, and incorporate new habits into your life. Your Golden Years may depend upon it.