An Associated Press story appearing in the Washington Post this week carries disturbing news about the deteriorating financial health of older Americans.
According to an analysis by the Consumer Bankruptcy Project, which studied bankruptcies filed between 1991 and 2007, the bankruptcy filing rate has risen dramatically for Americans over the age of 55, with the oldest age group having the greatest increase. People 65 and up were more than twice as likely to file in 2007 as compared to 1991. The filing rate for those 75 and older more than quadrupled in the same time period.
Elizabeth Warren, a Harvard Law School professor and one of the study’s authors, is quoted, “Older Americans are hit by a one-two punch of jobs and medical problems and the two are often intertwined. They discover that they must work to keep some form of economic balance and when they can’t, they’re lost.”
The AP story notes that:
Higher prices for ordinary consumer goods have hit seniors on fixed budgets. For older Americans living below the poverty level, or not far above, a safety net likely doesn’t exist for economic setbacks such as medical problems. And some fall prey to scams that cripple their finances.
Warren noted increasing numbers of Americans are entering their retirement years with significant debt and are still paying off mortgages. She said it was wrong to assume that lives of luxury are bankrupting seniors; rather, they’re incurring debts to meet needs such as medical treatment.
Half of all older households in the U.S. are trying to make ends meet on roughly $28,000 a year. At PRC we’re concerned that the financial situation of retirees could become even worse in the future. As more companies freeze or stop their traditional pensions, more older people may have to file for bankruptcy. The reality is that pensions have helped keep millions of retirees out of poverty. People with pensions and Social Security have more than twice the income of those living on Social Security alone.
You can download a copy of the Consumer Bankruptcy Project report, “Generations of Struggle,” at the website of the AARP Public Policy Institute here.