Older Americans entering retirement age may be doing something different than the generations before them. They may be entering retirement with substantial debt.
The New York Times reports that bankruptcy is three times more common among people 65 and older than it was in the early 1990s.
The necessity of bankruptcy for senior debt
While other generations struggle with debt too, younger people may have an easier time enduring debt because of job opportunities. Older Americans have fewer opportunities because it is more difficult for them to find a job and then to keep the job at their age.
The factors behind senior debt
Out of five seniors who file for bankruptcy, about three have medical expenses that they can no longer manage. Older adults must deal with high premiums and coverage gaps that force them to handle some of the costs. If on Social Security, medical bills can account for nearly half of the check.
Another factor behind senior debt is the family. Many older adults claim that they must pay for their aging parents’ medical bills and the expenses of adult children. Many parents choose to help fund their children’s college education. They may cosign on student loans or take loans out for their children. Student loan debt can reach over 100,000 dollars in some cases. In past generations, older adults carried little debt into retirement. Lower-income individuals are more likely to have high debt to income ratios. Many have debts that are almost half of their income. Chapter 7 bankruptcy is a tool to clear debts from spousal death, divorce, medical costs and job loss.