Older Americans, ages 65 and older, are increasingly filing for bankruptcy, with the rate more than tripling since 1991, according to a study from the Consumer Bankruptcy Project titled “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society.” Between 2013 and 2016, 12.2% of individuals ages 65-74 filed for bankruptcy annually versus 2.1% in 1991. This trend cannot be explained adequately by the aging US population—which rose only 2.3% from 1991-2015. Instead, the study’s authors attributed this phenomenon to several problems.
First, reductions in Social Security and Medicare occurred with Congress raising the age for full retirement benefits. Second, retirement savings shifted from typical pension plans to 401(k) plans. These plans give workers greater discretion on how much money to save and invest. Third, other contributing factors include rising medical expenses which can quickly wither away at an individual’s savings. Finally, there are other uncontrollable factors that lead to this situation. For example, divorces, a death of a dependent spouse, and loans to one’s children or grandchildren are all situations which can lead to growing debt.
For seniors filing for bankruptcy, their chances of recovering from this ordeal are unlikely, as “they simply do not have enough years to get back on their feet.” For these individuals, their median debt is $101,600, which is three times the filer’s average income. The authors of the study predict that as America’s population grows, this upward trend among older Americans will only continue to climb.
Please contact this law firm if you have any questions about the impact of this trend on Americans suffering from disabilities.