Kevin Clayson, the vice president of REIC, wrote an outstanding article called The Worst Investment in America.
You would be surprise to find out that more than 200 million Americans invest into a particular investment every month with the following features:
- It earns on average a zero to negative 3 percent annually
- Once the investment is fully funded, it produces no income, no dividend, yet you are still required to pay taxes on it annually
- Every dollar you put into this particular investment, increases rather than decreases risk.
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The Worst Investment in America
Debt and retirement aren’t supposed to go together. We envision older Americans living thriftily in paid-for homes, clipping coupons and eschewing credit card debt.
While that describes plenty of older people, it doesn’t capture the whole picture:
- Nearly six out of 10 people ages 65 to 74 have some kind of debt, according to the Federal Reserve’s Survey of Consumer Finances. The most common kinds of debt include mortgages (32.1%), credit card debt (31.9%) and installment loans (27.5%). The number carrying debt drops to four in 10 for people 75 and older (18.7% have mortgages, 23.5% have credit card debt and 13.9% have installment loans).
- Some seniors carry huge debt loads relative to their incomes. Nearly 16% of households headed by 65- to-74-year-olds said their debt payments exceeded 40% of their incomes. Nearly 14% of those 75 and older were in the same bind. Among other age groups, the percentage that devotes 40% or more of their incomes to debt ranges from about 13% in the 34-to-44 age bracket to 16% for those 45 to 54.
- The bankruptcy rate for people 55 and older soared from 1991 to 2007, according to a study by the Consumer Bankruptcy Project. People 55 and older accounted for 8% of bankruptcies in 1991 but 22% of the cases in 2007. Bankruptcy rates for people 75 and up more than quadrupled.
