Study: Number of Senior Citizens Declaring Bankruptcy Rose Sharply Since 1991

By:
Chris Gaetano
Published Date:
Aug 8, 2018
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A recent study has found that the number of Americans aged 65 and over declaring bankruptcy has risen sharply since 1991, with the most cited reasons being medical expenses or reduced income, according to NPR. The study used data from the Consumer Bankruptcy Project, which has been collecting data on, among other things, the age of bankruptcy filers since the early '90s. The data indicated that, during this time period, the number of Americans 65 to 74 filing for bankruptcy increased two-fold, going from 1.2 per 1,000 people to 3.6; the number of Americans 75 and over filing for bankruptcy increased more than three-fold, going from 0.3 to 1.3 per 1,000 in the same time period. Among all Americans who filed for bankruptcy, the percentage of those 65 and over nearly quintupled over just two and a half decades, going from 1.8 percent to 8.9 percent. Those 75 and older saw a 10-fold increase, from 0.3 percent to 3.3 percent. 

In contrast, bankruptcy filing rates fell for every other age cohort in the data set within the same time period, with the most dramatic being the 18-24 cohort, which reduced its filing rate per 1,000 people by 77.8 percent since 1991. 

Follow-up survey data found that income decline was the most frequently cited reason for filing for bankruptcy, with 69.1 percent saying they either "very much" or "somewhat" agreed. This could have come from inadequate retirement income, job loss or moving to a job that pays older people less. This led many to go into debt, which then led to a great deal of stress from aggressive debt collectors. Consequently, 71.6 percent cited pressure from debt collectors as another reason they filed. Meanwhile, 62.2 percent said that medical expenses were a catalyst for bankruptcy, with comments suggesting that Social Security and Medicare were inadequate in addressing costs. Beyond the hospital bills themselves, medical problems also led to missed work and therefore missed income, with 69.6 percent saying this was also a factor in their decision to file for bankruptcy. 

The single most important thing that seniors have had to go without before filing for bankruptcy was, at 52 percent, medical care: surgeries, doctor visits, prescriptions, dental care and health/supplemental insurance. 

The study's authors noted that through most of the 19th century, few of the elderly poor could count on support from the state or even family, with many consigned to poorhouses and treated, essentially, as burdens and outcasts. The Great Depression and its aftermath, however, saw several major programs put into effect aimed specifically at ensuring that the elderly had some degree of care. They concluded, after looking into this latest data, that it would appear the country is going full circle on its attitudes toward the poor and elderly, pointing to major cuts over the years to these same programs. 

"Absent significant policy changes that reassume the risks of aging and effectively insure the financial stability of older Americans, our data suggest that the trend of an aging bankruptcy population will continue. In 2015, almost 15 percent of the U.S. population was 65 and over. By 2050, almost a quarter of Americans, 88 million, will be over 65 (U.S. Census 2016). If current bankruptcy trends among seniors continue, our bankruptcy courts will be flooded with financially broken retirees. For older Americans, bankruptcy is too little too late. By the time they file, their wealth has vanished, and they simply do not have the enough years to get back on their feet. Our data expose the severity of the continuing financial decline of older Americans. Now that we can see the magnitude of the coming storm of broke elderly, it is time to renew our commitment to supporting our citizens as they age," said the paper's conclusion. 

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