For many older Americans, life has become harder to afford, and debt has become harder to manage. Findings from a recent study reported by the New York Times indicate that a big change in bankruptcy demographics illustrates a pervasive economic problem that many responsible, hardworking adults never imagined they’d experience when they hit retirement age.
There is bad news AND good news in this story.
The bad news: An enormous shift in bankruptcy demographics
Overall, more individuals seeking bankruptcy protection are older, and mature people are seeking debt relief in court at far greater rates than during the previous generation. The Times got its data from a recent study from the Consumer Bankruptcy Project, which found that:
- For the 65-74 age group, the number of bankruptcy filings per 1,000 people tripled from 1991 to 2016, increasing by a staggering 204 percent: In 1991, there were about 1.2 65-to-74-year-olds out of 1,000 filing for bankruptcy; the 2016 number was 3.6 per 1,000. That is an astounding shift over a 25-year period.
- In 1991, just over two percent of all bankruptcy filers were 65 or over, whereas in 2016 that figure increased nearly six times to 12.2 percent of all filers.
- Causes of financial distress for people in this age group included typical factors associated with aging Baby Boomers — rising medical costs, less comprehensive health coverage, reductions in personal income, and the replacement of traditional pensions with employee-funded retirement savings accounts — but also factors like burdens from co-signing student loans and other debts, later-in-life divorces, and the cost of raising grandchildren.
- As compared to 25 years ago, a MUCH larger percentage of older Americans have a home mortgage. In the past, a great majority of senior citizens had paid off their homes by the time they were eligible for full Social Security benefits. But the study’s statistics say that for homeowners over 65, there has been an increase of more than 20 percentage points of those with a mortgage burden — this means that the percentage of homeowners with a lien (or two) on their house in the 75+ group DOUBLED.
The good news: Bankruptcy can be life changing, no matter your age
While these statistics are not comforting on the whole, it is very important to understand that bankruptcy can bring enormous financial relief to older people who qualify. If you are struggling with debt because of health-care costs, family issues or other problems, get advice about your legal rights — from a professional.