American seniors have seen their debt levels increase significantly over the past two decades. It is estimated that the total debt load carried by American consumers over the age of 70 years old increased by 543% between 1999 and 2019. It now stands at a record high of $1.1 trillion, according to the Federal Reserve Bank of New York.
Individuals who were in their 60s saw their debt increase by 471%, bringing their total debt load to $2.14 trillion. Seniors were not the only group who saw large increases in their debt, but these two age groups saw the largest increases.
Arguably, it is said that senior consumers have been harmed the most by tough financial circumstances. These high debt loads come at a bad time for older Americans. As they enter retirement, they are often living on fixed incomes, making it very difficult for them to handle large amounts of debt.
According to a 2018 report published by the Employee Benefit Research Institute (EBRI), seniors who are in retirement run the risk of not having enough money in the event of a difficult financial situation. Their limited incomes leave them with very little discretionary income in the event of a major medical crisis or other unexpected expense.
The study reported that the percentage of households headed by individuals over the age of 76 had debt payments that amounted to 40% of their income. This ratio is used by financial experts to determine whether a family struggles with their debt load. The higher the percentage, the more the family struggles. This figure increased over 23% between the years 2007 and 2016, according to EBRI.
Many factors play into why seniors are struggling. Some point to the fact that most employers are offering only high-deductible health plans for medical insurance options. These plans force individuals to pay for their high medical bills with credit, and many times, they are never able to pay off these expenses. Many individuals are living longer than before, which means that their healthcare needs become more expensive and more involved as they age.
More senior consumers are also carrying student loan debt, with the average student loan debt for 65-year-olds increasing by 886% between 2003 and 2015.
The number of senior Americans filing for bankruptcy has jumped significantly, as well, according to a 2018 collaborative study from the University of Idaho, Indiana University Maurer School of Law, University of Illinois College of Law, and University of California-Irvine School of Law. It is reported that one in seven bankruptcy filers is over the age of 65. Bankruptcy is often the best solution for these individuals in escaping their debt. Certain types of debt, including mortgages and car loans, may be more manageable for their financial situations, but unsecured debt, including credit card and medical debt can be discharged in a bankruptcy, thus freeing the person from that added stress and strain on his or her income. If you are a senior and are struggling to make ends meet, facing a large amount of consumer debt, a bankruptcy attorney can help you determine the best way out of your financial predicament.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.