04 Aug Bankruptcy And The Elderly! Part 2
Part One of this article discussed some of the economic factors that caused debt to increase during the 1980’s and 1990’s.This part will discuss why these economic factors have resulted in the fastest growing group of Chapter 7 fliers being those aged 60 and older.
Research by the AARP Public Policy Institute has shown that during the 1990’s indebtedness increased at the same pace as wealth, but savings declined substantially. The AARP study revealed that:
- In the 50 and over group median debt levels nearly doubled at every income level.
- Seniors, defined as those age 65 or older, saw an 89 percent increase in credit card debt between 1992 and 2001.
Other factors that have lead to an increase in elderly bankruptcy filings are:
Lack of adequate funds for retirement.
- Studies have shown that 14 percent of 64 year olds face retirement with a negative net worth.
- More than one-third of seniors depend on Social Security for over 90 percent of their income.
- The percentage of seniors borrowing against their homes in order to support themselves increased from 20.7 percent in 1990 to 28.3 percent by 2000.
- Medical expenses such as deductibles, co-payments, dental care, vision care and prescription drugs, paid by credit card, are a short term solution to elderly whose household income that typically declines after age 55.
- Employer sponsored supplemental insurance plans has declined from 66 percent of employers in 1988 to 38 percent in 2003.
The factors that have caused the increase in bankruptcy filings among the elderly are unlikely to change in the immediate future.
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