Increase in bankruptcy filings by seniors

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We were over budget and it didn’t look good.

She was retired and in her late 60s. His only income is social security. Between the cost of health care, medication, food, and rent, there was really nothing left to manage the thousands of dollars in credit card debt. The credit was the bridge she used to extend her benefit check.

“You have to file for bankruptcy,” I said.

She didn’t say anything for quite a while.

“But I pay my debts, I always have,” she finally replied. “Scripture says, the wicked take a vow and pay not.”

Throughout her working life, she had enough income to cover her expenses. But now there weren’t enough. Even if she only paid the minimum due, she would be over 90 before it was all paid off. The stress of debt was too much to bear. By the time she overcame her embarrassment to ask for help, bankruptcy was the only viable option.

Filing for Chapter 7 bankruptcy was devastating for her. Yet that’s what saved her from increasingly aggressive letters and calls from creditors. Things are still very tight, but she manages to make ends meet.

Last week, many news outlets jumped on this detail: data from the Consumer Bankruptcy Project shows that bankruptcy filings by people 65 and older are on the rise.

“The social safety net for older Americans has shrunk over the past two decades,” the paper says.Aging Bankruptcy in the United States: Fallout from Life in a Risky Society.” “The risks associated with aging, declining incomes and rising health care costs have been shifted to older people. At the same time, older Americans are increasingly likely to file for bankruptcy, and their representation among bankrupts has never been higher.

According to research compiled by a group including Deborah Thorne of the University of Idaho, Pamela Foohey of Indiana University Maurer Law School, Robert Lawless of the University of Illinois School of Law and Katherine Porter of the University of California, Irvine Law School.

“The magnitude of the growth in the number of older Americans going bankrupt is so large that the broader trend of aging in the US population can explain only a small part of the effect,” the researchers wrote. “In our data, older Americans report facing heightened financial risks of insufficient income and unmanageable health care costs as they try to cope with cuts to their social safety net. .”

They report that the median primary bankruptcy filer has a negative net worth of $17,390.

Here is a chilling proclamation from the report: “For a growing number of older Americans, their golden age is fraught with economic pitfalls. . . Absent meaningful policy changes that take up the risks of aging and effectively provide financial stability for older Americans, our data suggest that the aging trend in bankruptcies will continue. For older Americans, bankruptcy is too little too late. By the time they file, their wealth is gone and they simply don’t have enough years to get back on their feet.

Last week, I was on NPR’s 1A to talk about this trend. I was joined on the show, hosted by Joshua Johnson, by Thorne, the principal investigator of the Consumer Bankruptcy Project, and by Cindy Hounsell, president of the Women’s Institute for Secure Retirement (WISER).

“Oh, come on: who could have maybe imagined that the systematic theft of baby boomer pensions to artificially inflate stock prices and temporarily boost corporate profits already adversely affect real people? one listener wrote.

If things aren’t so bad financially and you want to avoid bankruptcy, read: Ready to pay off your credit cards? Try the ‘Debt Dash’ method

Retired or not, read: Are you plagued by serial debt disorder?

See also: Should you pay off your debt before you retire?

I spent several years of my career reporting on bankruptcy. And what I do know: for most, it’s not an easy decision. I’ve never seen people jump out after a bankruptcy hearing thrilled that their debts have been cleared. I saw people who were shamed and beaten, who finally felt that filing for bankruptcy was their last resort.

Did you have to declare bankruptcy during your last years? Why? And have you recovered financially since the deposit? Send your comments to [email protected] Please include your name, city and state. Put “Senior Bankruptcy” in the subject line.

Retirement rants and praise

I am interested in your experiences or concerns regarding retirement or aging. What do you like about retirement? What was a surprise?

If you are not yet retired, what worries you financially?

You can declaim or rave. This space is yours. It’s a chance for you to express what you think. Send your comments to [email protected] Please include your name, city and state. In the subject line, put “Retirement Rants and Raves”.

In last week’s newsletter, I asked: Are you still working beyond the so-called retirement age? How does it work for you?

Carol Marsh of Missouri wrote: “I will be 79 next February, but I work more than 40 hours a week. I plan to work at least another year, but will probably stay beyond that. Luckily, I work for a great company that values ​​my experience and skills. I started with them at sixty-seven and have just celebrated my eleventh birthday.

“After 14 years as an employee and 17 years as an employer, I sold my business in 2005 at age 55 with a three-year non-compete clause and attempted to retire,” wrote Richard Jones from Truckee, California. “The first years were great. I joined an African dance class, read all the books I had always wanted to read, and started exercising every day. But at 57, I was going crazy. So I started taking courses to get a teaching degree. After several job interviews, I discovered that most 35-year-old high school principals would rather hire a 28-year-old female than a 59-year-old male. Even though we survived the housing collapse of 2008 in good shape, it made me realize how easy it was to lose everything I had worked for, so I started looking for work in the same industry that my business had been in. I was lucky, I found a 1099 job where I work eight months a year, four to five hours a day. For the next few months, I’m also volunteering for a congressional candidate. My “hope” is to work until I die.

“I’ll be 68 at the end of October and still working full time at the same job for 12 years,” wrote lonnie. “Why? Because I earn a good salary, I don’t use any of my 401(k) savings; and I continue to contribute 10% of my salary to my 401(k) with a 4% employer match I work for an ESOP [employee stock ownership plan] company, so I get an additional $20,000 in my account each year. I like my job. I have good health insurance coverage from the employer and I am in good health. Why not keep doing what I love, put money in the fund and have health insurance? When I retire at, say, 70, I will be much better off financially. Like everyone else, I like to travel and pursue my hobbies. I even plan to continue working two to three days a week, with the understanding that I will regularly take a few weeks off to pursue my travel interests.

Barry Wind of Holland, Pennsylvania, wrote: “Not being retired has been wonderful. When I turned 75, I started training in a new gym. I told people they were part of my new 25 year plan! They laugh. I’m serious. My paternal grandfather and my maternal grandmother lived until the late 90s. My mother died at 89 and my father at 79. Both continued to work until their last illness. It is my long term goal to DANCE at my great granddaughters wedding. Since my eldest grandson is only 16, I have a long way to go. We’ll see if I’m doing well. At the moment, I work in my own accounting firm. My wife and I travel, go to the theater, spend time with family and friends, volunteer our time and money, and enjoy the fruits of our labor. I keep saying we’re spending the grandkids’ money, so let’s enjoy it. It’s good to know that I work because I like it, not because we need the money. I never believed that the good Lord had put me on this earth to spend a third of my life playing golf! There must be more. So I exercise, work, read, volunteer, and have fun. I recognize that the time will come when this phase will be over. Until then, I want to savor the opportunities.

Oregon’s Owen Dell wrote: “Still working part-time at 67 and have no intention of quitting. I don’t really need the money, so it’s about satisfaction, well-being and service to my community. With a lifetime of practice under my belt, I’m better at what I do than I’ve ever been, I have fun, I create good in the world, I make people happy, and to the extent that I know dementia hasn’t set in yet. After a high-pressure career, I moved to a small community six years ago and began my landscape architecture practice with great success. I finally have the career I always dreamed of. Why stop now?”

Lois Valerio of Los Angeles wrote: “My husband and I both retired in our 50s (57 and 59, respectively) and couldn’t be happier. We moved from New York to California for the weather and the lifestyle. We enrolled our two children in a private college without any debt. How did we do this? Hard work and planning. We are both first generation college graduates, I enrolled in college and law school. We worked hard in our careers and moved forward. I took 10 years out of my career to raise our children, but we still set aside money for their education from the moment they were born. We bought and sold houses and made money from the sales. We were living within our means without any credit card debt. Our children are now grown and we are enjoying life while we are still young (66) and healthy. My advice, retire as soon as you can. There is a lot of life to live!

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