The number of American seniors filing for bankruptcy has rocketed by 500% since 1991. The Consumer Bankruptcy Project has revealed that 12% of individuals who file for bankruptcy today are seniors, compared to just 2.1% less than three decades ago. These are the same seniors who are referred to as the nation’s Baby Boomers and are retiring at a rate of 10,000 per day according to the Alumni Association.
Why the increase?
One reason cited for the sharp increase in senior bankruptcies is Social Security which has been unable to stay in line with inflation. For the first time in 36 years, Social Security is set to exceed total income this year. Other causes include high medical costs and inadequate retirement saving. Financial experts advise that individuals require $1 million for a comfortable retirement. Yet, Bankrate states that the average 65 to 74 year old has just $126,000 set aside.
Finding a resolution
Data from the U.S Census reveals that the average retirement age in America is 63 years of age. However, in order to qualify for their full Social Security benefits, it’s best for seniors to wait until they’re between 65 and 67 years old before retiring. Staying in the workforce as a senior is beneficial financial as it also ensures you have a guaranteed regular income and it will boost your Social Security payments in later life. For each year that you delay receiving your Social Security benefits between the ages of 62 and 70, your benefits will rise between 6.5% and 8.4%.
How America compares to other countries
Bankruptcy among seniors appears to be at its worse in the U.S. 14,000 Canadian seniors filed for insolvency during 2016 which was an increase of 112% from 2007. Meanwhile, in the UK, those aged over 65 had the lowest amount of personal bankruptcies among all age groups in 2017, according to the UK government. These figures from the UK show that there is a lot more America can do to protect its ageing citizens from increasing debt and eventual bankruptcy.
The number of seniors filing for bankruptcy in America is rising quickly as an increasing number of individuals battle with rising costs and debt. Therefore, action must be taken by the government and by seniors to better prepare them financially for retirement.