When American’s spend their life at work, they expect, and are told, that they will be able to relax in retirement with a hefty nest-egg. Unfortunately, this scenario does not always pan out.
More and more seniors are facing bankruptcy after retirement. A 2018 study shows that senior citizens over 65 are filing for retirement at triple the rate of previous years. Just over 12 percent of those who file for bankruptcy are 65 or older. Why is this the case?
Common reasons senior citizens declare bankruptcy
When seniors are in situations where they are running out of money or unable to pay their debt, it can be tough to keep up. The following are common reasons why individuals 65-years-old and older are needing to file for bankruptcy.
- Delayed social security benefits: The eligibility age to collect one’s full social security benefits have been increasing lately, which makes more individuals want to wait to take their money. This causes more seniors to slowly drain their resources while waiting.
- 401(k) savings: Because 401(k) accounts are becoming increasingly popular with current employers, replacing pension plans, older individuals are struggling. It can be hard to find a place of work that supplies a 401(k) plan, as many part time jobs do not offer these benefits, and it takes a while to build up a good amount of money for retirement.
- Increased health care costs: The cost of health care in the United States have made it impossible for many to have the coverage that they need. This causes individuals to pay for their medical bills out of pocket, which can quickly become unmanageable. Older citizens are at greater risk for medical need, which exacerbates the issue.
- Lack of income: If you are debt-ridden when retirement comes along, it can be hard to manage when you no longer have a steady stream of income. Carrying debt into retirement can cause many to go bankrupt.
- Helping pay others’ bills: Many individuals get roped into paying the bills of their children or older parents. These additional bills can be taxing on someone who is struggling to get by on their own and send many down a spiral toward bankruptcy.
Filing for bankruptcy is not the end of the world, but it can seem scary. As bankruptcy filings in older Americans rise, it can be beneficial to know what the factors are that cause this situation.