steady erosion of Medicare and Social Security benefits, the shift away from
defined benefit pensions, and rising health care costs have all been blamed for
seniors’ financial woes over the last decade.
Now a group of researchers
has the bankruptcy data to prove it.
Since 1991, the rate of
Americans aged 65 to 74 filing for bankruptcy doubled, while the frequency
tripled for those over 75 according to new study by researchers from the
Consumer Bankruptcy Project. In addition, one out of every seven bankruptcy
filers in the United States is aged 65 or older.
is nearly a five-fold increase over just two and a half decades,” the
researchers, four professors at U.S. universities, wrote. “This is a notable
study, first reported in Sunday’s New York Times, bases its data on surveys
collected between February 2013 and November 2016. The researchers asked 3,200
people who had declared bankruptcy about the circumstances that led them to
take such a dramatic choice, and the reasons for older Americans frequently
came down to medical expenses and debt.
wife developed medical problems and had to leave her job, resulting in a loss
of income,” one respondent told the researchers. “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.”
individual was one of 62.2% who identified medical expenses as a key reason
they entered bankruptcy, with many placing the blame on reduced government
benefits for seniors. For instance, one respondent was forced into bankruptcy
after a back surgery spurred several tests not covered under insurance.
next thing I knew, the bills began piling up,” the respondent wrote. “I
got to the point I owed more than I was making on Social Security. To get
out from under these medical bills I had to file bankruptcy.”
Consumer Bankruptcy Project team also takes aim at policies that have
increasingly pushed the retirement burden on individuals and not the government
or employers — for instance, the steady replacement of pensions with
self-managed 401(k) and IRA plans. In one case, a respondent noted that he or
she mismanaged a retirement account while dealing with depression. Unable to
restructure the debts incurred by unwisely leveraging the account, and with no
job, the respondent turned to bankruptcy.
of employment opportunities for older Americas only compounds the effects that
bankruptcy has on seniors. Whereas younger filers can reasonably expect to
return to a solid financial footing with the help of their careers, older
people have no such luxury.
when older Americans file bankruptcy, they are most likely to experience a
long-term, probably permanent second-class economic status,” the researchers
only solution, in the researchers’ eyes, is to focus on strengthening the
social safety net that has been weakened over the years since Lyndon Johnson’s
Great Society legislation ushered in Medicare and Medicaid.
the core, the lessons of prior decades show that aid to older citizens must
originate with our government,” the group concludes. “Community and
charitable organizations, while having the best of intentions, are
inadequate. Comprehensive policies led by our government will ensure financial
stability for all elderly citizens.”