There are many industries built around people that are struggling with money: pawn shops, payday lenders, car title lenders, and others that charge loan rates from 30% to 300%, when annualized. By offering an advance, and not a loan, these firms avoid interest-rate limits on loans by state usury laws. Now another type of lender has sprung up that loan on retiree pension payments, called pension advances. As the Baby-Boomer generation is now retiring with poor-performing retirement accounts there is naturally a growing number of people who could use a loan. Selling their pension payments is how many are paying it back. Today, these pension loan firms are charging annualized rates of 25% to 105% which is an onerous expense for a retiree on a fixed income. Some pension advances also require a life insurance policy with the lender as the beneficiary.
The first and best defense to avoid money struggles will always be financial literacy, no matter what your age. The earlier you learn how to create, maintain, and increase financial stability for yourself and your family, the more cash and credit options you will have when the drama of life creates some unexpected expenses. A high level of financial literacy will provide you with more reasonable options than loans at a rate of 30%-300% that eat away at your income and net worth.