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reOld age poverty in Germany has exploded. This is shown in the current atlas of debtors from the credit reporting agency Creditreform. Around 470,000 consumers aged 70 and over are considered over-indebted in this country, which is a good 23 percent or the equivalent of 89,000 cases more than the previous year.
The number is also increasing dramatically among people aged 60 to 69: 730,000 affected people means an increase of 13 percent or the equivalent of 84,000 cases. “The phenomenon of over-indebtedness is becoming even more important than in previous years,” says Michael Goy-Yun, CEO of Creditreform Boniversum, speaking of a “worrying development.”
According to experts, there are four reasons for the persistent strong trend towards poverty in old age and over-indebtedness in old age. In addition to the sharp increase in rents and property prices, this also includes the growth of the low-wage sector with correspondingly low pensions as a result, the tax liability of many pension income, but also the voluntary waiver of other social benefits, such as the so-called basic security in old age.
The over-indebtedness situation has generally improved. Creditreform reports that 6.85 million individuals in Germany were no longer able to pay their bills on October 1.
The consequences of Corona will be more serious than those of the financial crisis “
This means that there are currently around 70,000 consumers over-indebted less than in the previous year, the corresponding share dropped to 9.87 percent. This is because the sharp increase among older consumers is more than offset by an even greater decrease in the number of cases among younger consumers.
At € 189 billion, the volume of debtors is 3.4 percent or the equivalent of € 7 billion less than in 2019. “Surprisingly, the current data on over-indebtedness seems at first glance not to be affected by the effects. economic conditions of the corona pandemic “, describes Patrik-Ludwig Hantzsch. Creditreform’s head of economic research, the current situation.
However, this supposedly positive finding is not a sign of relaxation, the expert warns: “The end of the health-political and economic crisis situation is not in sight given the growing number of infections; the direct and indirect consequences will be more serious for the economy, society and consumers than those of the global financial crisis. 2008 and 2009 “.
It is true that state aid measures have mitigated the worst social effects. And a greater propensity to save and prudence in spending would have ensured that a widespread liquidity bottleneck has not yet materialized.
“In the next two years, the consumer situation will deteriorate significantly with a time lag,” predicts Hantzsch, referring to an already increased and even stronger predictable rise in unemployment, the exorbitantly high number of short-time workers and the struggles due to the existence of two million freelancers and freelancers today. .
This warning is not a coincidence. Because unemployment is already the most important reason for serious economic difficulties for individuals. This is followed by illness / addiction / accident, wasteful housework, separation / divorce / death, long-term low income, and failed self-employment as the main trigger.
In total, these so-called “Big Six,” as the ratios are called in the industry, account for 83 percent of all over-indebtedness cases. Unemployment has dropped significantly in previous years as a reason for a decline in the debt spiral. Because the persistent good economic situation has also ensured that the job market is in good shape. “This positive trend is now changing with the corona pandemic,” says Hanztsch.
Therefore, Creditreform expects further polarization of income and assets in the coming months. “The upper social classes can compensate for the loss of income and are increasingly reluctant to consume. The lower social classes, on the other hand, do not have or have very few financial reserves and, therefore, are in debt or over-indebted ”, says Stephan Vila, general director of Creditreform Boniversum. “There are already signs of financial strain that will lead to an increase in overdue debt cases.”
For the foreseeable future, this will also affect retirees, who have been the age group with the largest increase in the number of cases for several years. Example of more than 70: between 2013 and 2020, the number of affected increased by an impressive 325 percent, albeit starting from a low level.
Source: WORLD infographic
For comparison: the total number of individuals over-indebted has increased by only four percent in these seven years. Meanwhile, a good 3.6 percent of people over 70 have suffered payment problems, as it is called in official German. In the next youngest age group 60 to 69, there are even twice as many.
A large proportion of consumers in these age groups now have to earn something to support themselves, often in the context of so-called atypical or marginal employment, as Creditreform puts it.
At the same time, many older people are increasingly dependent on the support of food banks for their daily food supply. In 2019, the number of elderly people in need increased by 20 percent, according to the German association Tafel.
As a result, more than one in four of the 1.65 million registered users of food banks in Germany belong to this age group. Jochen Brühl, President of Tafel Deutschland, describes this development as alarming.
According to a study by the German Institute for Economic Research (DIW), more than half a million older people receive this basic security. That is twice as much as when this instrument was introduced in 2003. At the same time, however, 625,000 beneficiaries forgo support, either out of shame or ignorance.
Source: WORLD infographic
Income is urgently needed. “Because when they retire, the chances that older people improve their economic situation drastically decrease,” explains Hantzsch, an expert at Creditreform. Younger consumers, however, have been able to get out of the debt trap many times over the past few years.
The number of affected people under the age of 30, for example, has been reduced by more than 21 percent or the equivalent of 303,000 cases to 1.11 million in one year. And that after there was a decrease of 167,000 cases in this age group last year. “This development obviously corresponds to the development of the youth unemployment rate, which in 2019 was only 4.4 percent on average for the year,” says the debtor atlas.
But the rate of over-indebtedness is also falling among people ages 30 to 39, for the third year in a row. However, this cohort is still the one with the largest number of people affected: 1.84 million. That corresponds to a rate of almost 18 percent. “However, this group is also particularly economically active,” Hanztsch explains, mentioning issues such as starting a family, building a house or professional positioning that define this stage of life.
As in previous years, almost nothing has changed geographically. Most of the debtors are in Bremen, followed by Saxony-Anhalt and Berlin with over-indebtedness rates of 12 to 14 percent. By contrast, the lowest value is in Bavaria: at 7.14 percent, it is almost half as high as that of the lower light Bremen.
The second best region in the ranking of federal states is Baden-Württemberg with a good eight percent, followed by Thuringia, Brandenburg, Saxony and Hesse, all of which remain below ten percent. The West is still a troublesome child. Since 2008, over-indebtedness has been worse than in the rest of the country.
And the structurally weak regions of the Ruhr area, which were characterized by an old industry, will likely remain the focal point of social problems in the future, according to the Schuldner Atlas 2020. “Rates of over-indebtedness in many cities in the area of the Ruhr have increased both year-over-year and long-term despite the current positive trend. “
