Why the Elderly are Filing for Bankruptcy
While seniors make up a small percentage of the overall petitions for bankruptcy, the portion of total bankruptcies that are sought by those over the age of 65 in the U.S. has significantly increased. In 1991, 2 percent of bankruptcy filers were over age 65. Now, elderly petitioners the make up 12 percent of overall bankruptcy filings.
A study by the Consumer Bankruptcy Project, titled “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” estimates that by 2050, more than 88 million U.S. citizens will be over 65. Now is the time to address the root causes of this upsurge in senior bankruptcies.
As the Baby Boomer generation ages, it is easy to dismiss the increase in senior bankruptcies as a trend caused by the increase in the elderly population, but there is more at play than that.
The underlying causes have to do with changes to the country’s financial system, employment market, and social safety net.
Pensions vs. DIY Retirement
As private companies abandoned their pension benefits systems in favor of employee-led 401K retirement plans, workers’ financial security has suffered. These changes were put in place years ago, but as increasing numbers of workers reach retirement age, the resulting shortcomings are being felt by more and more retirees. Those who insufficiently funded their retirement accounts, due either to underestimating retirement costs or to inadequate lifelong earnings, have nowhere to turn.
Ageism in the job market, as well as medical and mobility issues present barriers to continued employment for seniors. The shortage of employment opportunities for aging workers leaves them with no way to make enough money to support themselves and pay off their debt. This age bias coupled with and the rise in the retirement age has left many elderly debtors with few options.
For seniors who are able to continue working, wages are often stagnant and worker protections once associated with a union presence are nearly nonexistent.
Another concern more likely to be encountered by sickly seniors: missing work due to ongoing health issues.
The skyrocketing cost of medical care for seniors is another source of concern. The most common cause for unmanageable debt among seniors is unwieldy medical expenses. While the costs involved with a prolonged illness or serious injury can be overwhelming, the day to day cost of prescriptions and maintenance for common conditions can also be a struggle.
Financially strapped seniors also have to come up with copays and deductibles. They must factor in Medicare’s lack of coverage for many dental, eye, and foot-care issues, as well as hearing aids. The nonprofit Kaiser Family Foundation calculated that by 2030 such out-of-pocket expenses could eat up 50 percent of the average Social Security recipient’s income check.
Fidelity Investments estimates that a couple retiring this year would require $280,000 to cover the health-related costs expected throughout their retirement.
Brooklyn Elder Law Lawyers at Korsinsky & Klein, LLP Assist Seniors in Bankruptcy
Retirees struggling with debt may find relief through a bankruptcy proceeding. The Brooklyn elder law lawyers at Korsinsky & Klein, LLP can help you determine if filing for bankruptcy is your best course of action to alleviate the financial burdens you are under. Contact us online or at 212-495-8133. With offices in Brooklyn, New York, and Lakewood, New Jersey, we serve clients in Manhattan, Long Island, and Westchester, New York.