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Retirement plan: Die in debt

'You can't take it with you' also applies to credit card bills. But what kind of a retirement strategy is this?

By Teresa Mears Dec 6, 2010 3:27PM

We've all heard the expression "You can't take it with you."


Usually the maxim applies to assets. These days, an increasing number of retirees are applying that philosophy to debt, racking up thousands of dollars in credit card bills they have no intention of ever repaying, a survey says.

Some seniors are using the money to pay for "toys" and vacations. Others are going into debt for medical care and basic living expenses.


Cindy Perman at CNBC wrote about the survey:

Nearly 40% of retired Americans said they've accumulated credit card debt in their twilight years -- and aren't worried about paying it off in their lifetime, according to a survey released by CESI Debt Solutions.
"At the end of the day, some people of a certain age say, 'It's too late in the game for me to do anything about it. I can't win. So I'm just going to stop playing the game,'" said Neil Ellington, executive vice president at CESI.

It's a novel retirement funding strategy. Some respondents didn't seem to have a financially solid retirement plan. According to the survey:

  • 56% were in debt when they retired.
  • 96% refused to delay retirement because of debt.
  • 59% had less than $50,000 in retirement savings.  

The recession has hit older people hard, and rising number of retirees have been forced to file for bankruptcy or go back to work to make ends meet. Many who expected to fund their retirement by selling a large house have seen the value of their real estate cut in half. The value of retirement investments has fallen. Post continues after video.

According to the survey, these are the debts people reported incurring after retirement:

  • 33% went into debt to pay for medications.
  • 20% incurred debt for doctor bills and other medical expenses.
  • 26% used credit to pay for funeral arrangements.
  • 31% went into debt for leisure activities and entertainment.
  • 39% charged vacations and travel.
  • 28% used credit to buy groceries.
  • 33% went into debt for clothing and jewelry.

What happens to your credit card bills when you die?


If you have assets, your estate is responsible for paying your debts out of those assets. If you don't have any assets, and no one else's name is on those credit cards, your debt indeed dies with you. MSN Money columnist Liz Pulliam Weston has a column explaining what happens when parents die broke.


When the CNBC story was printed in USA Today, it drew more than 1,000 comments. Some respondents were predictably outraged by the fact that people would incur debt they knew would never be paid.


A reader named "Dargo" wrote:

I also believe that if I say I'll pay someone, come heck or high water, I'm going to pay them, period! I use credit cards for convenience and points. I've never carried a balance in my life. SHAME on these people who plan to screw companies out of things they buy and never plan on paying!! These sort of people are nothing but thieves no matter how you slice it!! If you are not worth your word, you are worth nothing.

Another reader, "johnhrf," was among many who saw nothing wrong with incurring debt you didn't plan to pay. He wrote:

In many cases these credit card companies are the same companies that stole the retirement accounts of people retired or just retiring. They wiped out pension funds and took government bailouts and handed million-dollar bonuses to their executives. These thieves don't deserve to be paid back.

But "mb56" pointed out that it's not necessarily the banks that lose: "It's not the bank you're screwing, moron ... it just gets passed along to the rest of through higher prices, fees, and interest rates."


What do you think of seniors who incur debt they don't plan to repay? Are they thieves? Are they desperate people who don't see any alternative? Or are they merely playing by the same rules corporate America does?


More from MSN Money:

Dec 6, 2010 7:38PM

Ethically, it doesn't matter what other people do or have done. It's all about what you do: this defines who you are, it defines the kind of world you are saying is OK. So if you steal you are a thief--doesn't matter if your victims made it easy for you, or if they themselves are not pure. If you are a thief, you're saying you want to live in a world where you can't own anything because anyone else can just walk in and take it, and that must be OK. Your children can't have anything either, for the same reason. There are many rationalizations for any unethical behavior, but nothing is worse than becoming someone you can't respect.

Dec 7, 2010 2:48AM

If you agree with the notion of spending other people's money and intentionally leaving unpaid debt when you're gone, congratulations you have learned well from your government. You pass the test. You are also the scum of the Earth and basically a worthless human being. You are now qualified to run for Congress.

Dec 7, 2010 4:15PM
AHHHHH, the Bush legacy!!!!!!!!!!!!!!!! spend like crazy without ever paying off debts, war for any stupid MONEY  reason, forget the constitution.  Bush's new USA...
Dec 7, 2010 2:17PM

My motto is "live rich and die broke." The guy who literally wrote the book on it is Stephen M. Pollan, in his "Die Broke" (Harper Perennial, 1997. $14)


It's the best money I ever put toward my retirement, which got to start a few years early because of this guy's advisements.



Dec 7, 2010 12:31PM

American society is rapidly turning into a have and have-not society (Dickens "Tale of two Cities").   Extreme wealth and extreme poverty.  I have read of many stories of many individuals "getting even" with the Man.  They have being diagnosed with  some incurable disease and they have sold all their assets. They then "manage" all their debts,  credit card and IRS debts and then leave this earth laughing at the collection agencies.  It apparently brings a very, very, deep sense of personal satisfaction when one dies, knowing that one has outwitted society and ones creditors.

Dec 7, 2010 10:55AM

Credit card co. do not have to give us credit when we

get old, they will adjust the monthly pmt to compensate for your debt to age ratio.

Dec 7, 2010 12:26AM
The concept that someone else's misdeeds justify yours is a VERY OLD lie.
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