More and more baby boomers file for bankruptcy: medical bills, credit, student debt
Baby boomer bank accounts have seen better days.
People aged 65 and over are more in debt than previous generations, and a growing proportion are filing for bankruptcy in the hope of alleviating it. Patti Waldmeir reported for the Financial Times.
Tara Siegel Bernard first reported on the trend last year for the New York Times, citing a Consumer Bankruptcy Project study: Since 1991, the rate of people 65 and over declare bankruptcy tripled, she wrote. The study looked at 895 personal bankruptcy cases and questionnaires from people aged 19 to 92.
“Older Americans are more likely than ever to find themselves in bankruptcy court seeking to protect themselves from creditors,” the study’s authors wrote. “Depending on their age group, their bankruptcy rate has increased from 200 to 300% since 1991.”
This is due to a confluence of economic factors – including the delay in full Social Security benefits, an increase in direct medical expenses, an increase in pensions replaced by 401 (k) savings plans, and declining incomes – which Offloaded the costs of aging over a generation with limited resources, according to the study.
“Seniors are living longer and paying increasingly higher medical costs for the privilege of staying alive; many have little or no company pensions and little personal savings to rely on, ”Waldmeir wrote.
In fact, 66.5% of all bankruptcies, regardless of age, are related to medical problemseither because of high medical bills or absence from work, Lorie Konish reported for CNBC, citing a study by American Journal of Public Health. This study examined the court records of a random sample of 910 Americans who filed for personal bankruptcy between 2013 and 2016, and found that 530,000 families file for bankruptcy each year for medical problems or bills.
Credit card and student loan debt fueling bankruptcy fires
But baby boomers also face debt pressures that did not exist for previous generations.
Siegel Bernard and Waldmeir both cited an additional factor that parents of baby boomers did not have to contend with: student loans. Baby boomers have student loan debt for themselves or for a loan they took out for a child or grandchild.
Recent research indicates that student loan debt is the root of many bankruptcies, regardless of age or generation. 32% of consumers who file for Chapter 7 (liquidation bankruptcy) bankruptcy have student loan debt, according to a LendEDU study which analyzed 1,083 individual bankruptcy cases of To resolve, a non-profit organization that helps low-income consumers file for Chapter 7 bankruptcy.
“The attitude of the baby boomers towards debt has not turned out to be as frugal as you might think, having parents who have been through
“, Kevin Leicht, head of the sociology department at the University of Illinois, told Waldmeir.” This is in part because they have jobs that don’t keep up with inflation and they may need to – be having five or six jobs to make ends meet. “
The turn to bankruptcy is particularly problematic given that baby boomers are should live longer than previous generations and therefore need to save more money to get by in their later years.
Debt has already become a major presence in the lives of older people, such as members of the silent generation, who are 74 to 95 old today. According to Waldmeir’s research, senior credit card debt has risen sharply – from 1989 to 2016, the percentage of Americans aged 75 or older in debt rose from 5% to almost 50%.