Retirement was supposed to be "the golden years." But these days, many elderly people find themselves in dire financial straits. Mounting credit card debt is leaving many with bankruptcy as their only viable option. Medical expenses, daily living costs, helping with adult children, shrinking or nonexistent retirement plans or savings - these all add up to not enough money to live on.
Numerous studies indicate how many of the elderly are in financial trouble. The numbers are sobering: the Sloan Center on Aging and Work at Boston College found that 30 percent of unemployed workers over age 55 have more credit card debt than retirement savings; 41 percent have as much.
A study by researchers at Rutgers University found that 22 percent of employed older workers reported increased credit card debt, and 12 percent said they had missed a credit card payment because of the economic downturn.
"They don't have anything to fall back on," said Carl Van Horn, a public policy professor at Rutgers University and co-author of the study. "They can't sell their house, their retirement savings are nonexistent, they owe all this money in credit card debt - and that's a bleak future."
A study from the University of Michigan examined bankruptcy filings in an attempt to determine why there was an increase in filings among the elderly. In fact, the study found those 65 and older were the fastest growing segment for bankruptcy filings.
The reasons why the elderly fall into financial distress are numerous and include:
- A potential lack of competence in handling credit cards (tricked into paying minimum payments and high fees)
- Unwillingness to ask for help (or not knowing anyone with the financial resources to help)
- Medical expenses: The data is unclear regarding how many bankruptcies are "medical," because there is some indication that equity loans and credit cards are used to cover medical expenses, so even non-medical bankruptcies may be caused indirectly by medical expenses.
Credit cards figure in most bankruptcies of the elderly, and it appears they are being used to augment income for spending on necessary expenses, not simply because of "spendthrift" habits.
Credit cards can be used by the elderly to, in essence, obtain loans without the potential embarrassment of having to go to a bank or ask a friend or adult children for help. Among the elderly, there is a high level of resistance to publicly admitting they need help or have suffered financial failure.
The high interest rates and fees associated with credit cards make them a "concrete life raft" for the elderly. This is made worse by the fact that their generally lower income and high debt load make the elderly, as the Rutgers report put it, "disproportionately poorer than the younger filers - the poorest of the poor."
Suggestions to help this situation are less than encouraging. At a time when state budget deficits are at record levels and the federal government is looking at ways to cut programs and expenses, it is unlikely any new programs to assist the elderly will arrive.
Even making the Bankruptcy Act more forgiving to the elderly is a stretch in this political environment. The Rutgers study concludes with a warning: "this increase in elder bankruptcy filings is the canary in the coal mine, warning us of problems that will become even worse as the baby boom...enters...[its] senior years."
If you are a senior and feel you are losing ground financially, speak with a bankruptcy attorney. A knowledgeable lawyer can help you determine what options are available in a non-judgmental atmosphere.
If you are an adult child who suspects financial trouble, speak with your parents; maintain an open discussion with them about finances. Observe their spending habits closely. If medical expenses appear to be more than they can reasonably handle, check to be sure they have things under control. These are difficult conversations, and the earlier you can start them, if possible with professional assistance, in the form of financial or legal planning, the more that can be done.