Imagine approaching that golden time in your life when you can finally stop the 9-5 grind and start enjoying life, only to find that you’re over your head in debt and have no reserves. Unfortunately, this is a reality for far too many senior citizens in the U.S. who are now facing bankruptcy.
According to new research, the number of senior Americans filing for bankruptcy relief is increasing. As discussed in an article published online by CBS News, seniors represent approximately 12.2 percent of the bankruptcy filings each year. The number of retirees filing for bankruptcy relief has increased fivefold since 1991. During the years studied by researchers, the number of Americans filing for bankruptcy relief who were over the age of 65 years doubled in number.
Researchers analyzed potential reasons for the increase in the number of retirees filing for bankruptcy relief. They used several methods, including written questionnaires. Respondents listed a variety of reasons for filing bankruptcy. One of the common problems reported by retirees who filed a bankruptcy case was the rising cost of medical care.
One respondent said, “all things went up in price.” When you combine the increase in living expenses, including health care costs, with inadequate retirement income, many older Americans have no choice but to seek bankruptcy relief. About 70 percent of the respondents reported that some of the factors that contributed to the reason for filing for bankruptcy included missing work and the rising cost of health care.
Researchers concluded that by 2050, we might see a “coming storm of broke elderly” based on the current statistics.
LACK OF WORK AND TIME TO OVERCOME BANKRUPTCY
Two other factors that appeared to contribute to the growing problem of elderly bankruptcies were lack of work and lack of time. Retirees often have a difficult time finding work because of their age and health. In addition, older workers do not earn as much as they did when they were younger. Therefore, it becomes much more difficult to find and keep a job. Retirees who can find a job do not earn a level of income that pays the debt they incurred when they may have been earning a larger salary.
A lack of time to overcome a financial crisis complicates the matter further. Bankruptcy is designed to give debtors a fresh start so that they can recover and rebuild after a financial crisis. For older debtors, they do not have the time to earn money to rebuild wealth and improve their financial well-being. The lack of income and time is a terrible combination that prevents many retirees from recovering after a bankruptcy filing.
THE EMPTY NEST A’INT SO EMPTY
In my almost 30 years of bankruptcy practice, I’ve witnessed another factor contributing to seniors filing for bankruptcy: children. To paraphrase a Jimmy Buffet song (Fruitcakes), “we all love’em, we all want’em, whatta we do with ’em?” Children living at home longer places tremendous financial stress on seniors. Elderlies who may want to retire may think twice about it if they still have kids living at home. If already retired, and on a fixed income, the financial burden on seniors is often overwhelming.
Parents often help out a child in the form of a cosigned loan to help buy a car, taking over a car note a child can no longer afford, or by simply providing food and clothing. It’s not unusual to see mom and dad supporting a child, a spouse, and grandkids. That’s a recipe for negative cash flow when on a fixed income.
A recent Pew study confirmed that more children are staying at home longer or are moving back in with parents. The study suggests one reason may be education level. Over the past several decades wages have declined for the less-educated. Regardless of the reason, children are relying on parents to support them for longer periods. This places financial stress on those seniors.
Seeking Bankruptcy Advice Earlier From A Georgia Bankruptcy Attorney
If you are struggling to pay bills, we encourage you to seek advice from a Georgia bankruptcy attorney. In most cases, retirement savings and retirement income are exempt in a bankruptcy filing. Additionally, bankruptcy exemptions can protect the equity in your home.
Before you withdraw your savings or use the equity in your home to pay debts, it is advisable to meet with a Georgia bankruptcy attorney. Schedule a consult with a skilled Georgia bankruptcy attorney today. Your options for filing for bankruptcy relief may give you the debt relief you need while preserving your retirement savings and home equity.