The “Coming Storm of Broke Elderly”
This phrase was coined in a paper published by the Social Science Research Network in August of this year. According to the paper, from 1991 to 2016, the bankruptcy rate for people over the age of 65 has risen 204%. Explanations include low income, scarce or failing pensions, and the furious rise in health care costs.
What is Causing the Increase in Bankruptcy Rate?
There are many factors that cause debt to pile up and make bankruptcy the only option, but for people 65 and older, three of the main factors are:
- Low income – According to aarp.org, in 2012, the average income for people 65 and older was $31,742. The Kaiser Family Foundation reported that out-of-pocket health care costs consume about 41% of the income of people over 65.
- Failing pension plans – The Society for Human Resource Management projects that 114 major multi-employer pension plans will fail in the next 20 years due to lack of funding. The Federal Government’s own pension plans are looking at a $7 trillion deficit and Congress says it may be too late to fix it (com).
- Rising health care costs – Fidelity Investments released a report that stated “A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement”. According to com, the average 401k balance for individuals 60-69 was $167,700 in 2017.
Why Do People over 65 Wait to Seek Help?
Most people 65 and older were raised by parents who lived through the great depression. Asking for help is not easy and often not even considered. They throw minimum payments at the credit card bills over and over again because they believe paying their bills is the honorable thing to do even though they are not reducing their principle balance. Then, a medical emergency happens and they have to stop paying their bills.
Some Quotes from People in the Study
When speaking to the authors of the “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society” study, subjects said:
- “My wife developed medical problems and had to leave her job, resulting in a loss of income. About two years later, I developed medical problems and was not able to continue working,”
- “We got to a point where we simply could not handle the debt load. The constant calls from bill collectors forced us to contact an attorney for help.”
If you, your parents, grandparents, or any other loved ones are being harassed by creditors, you are not alone. Circumstances are often out of our control and sometimes bankruptcy can actually be a good option. To utilize this tool, you need the experience of a skilled bankruptcy attorney. Elias Dsouza of Dsouza and Strachan Lawgroup Group is dedicated to helping people regain control of their life and finances. Contact Elias today for a free consultation.