Boots & Sabers

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2155, 16 Aug 18

Increasing Number of Elderly Declare Bankruptcy

This is a concerning trend.

Older Americans are filing for bankruptcy at more than double the rate of just 25 years ago, a sign of a “coming storm of broke elderly,” a new study finds.

The rate of people 65 and over filing for bankruptcy grew nearly 204 percent from 1991 to 2016, a study published by the Social Science Research Network found, and the percentage of seniors among all U.S. bankruptcy filers increased by nearly five times over the same period.

Researchers looking at data from the Consumer Bankruptcy Project found that high health care costs, combined with reduced incomes and the widespread decline of pensions, are all contributing to the growing trend of “financially broken retirees.”

Deborah Thorne, one of the study’s authors from the University of Idaho, said “it’s not an individual’s fault” when they have to file for bankruptcy, citing issues with retirement systems and Medicare.

Wait… what? “”it’s not an individual’s fault” when they have to file for bankruptcy”??? Whose fault is it, then? Part of the problem is that people aren’t taking responsibility for their own financial affairs. They behave as if magic pixies flew into their bank accounts and spent all of their money. Except in rare circumstances, almost every bankruptcy is an individual’s fault. Let’s think about this for a minute.

For years, we have seen Americans saving way too little.

Northwestern Mutual’s 2018 Planning & Progress Study, which surveyed 2,003 adults, found that 21 percent of Americans have nothing saved at all for their golden years, and a third of Americans have less than $5,000. To put that into perspective, it means that 31 percent of U.S. adults could last only a few months on their savings if they had to retire tomorrow.


Young people who haven’t had as much time to save aren’t skewing the statistics, either. The report found that 33 percent of boomers have $25,000 or less in retirement savings.

Whose fault is that? It’s the individual’s fault, of course. Many, many people can save more, but choose not too. They choose to buy stuff now instead of putting that money into an investment or savings account. We live in a consumption culture and people consume at a rate far higher than their means. The lack of savings, often coupled with massive personal debt, leave far too many people without the means to deal with even a relatively minor life emergency like a medical bill, car accident, flooded basement, or whatever. They are unable to afford these unlikely, but not unexpected, events.
And why do most people go bankrupt? The top 5 reasons are:
1) Medical expenses
2) Job loss
3) Poor/Excessive use of credit
4) Divorce/separation
5) Unexpected expenses
#3 is obviously an individual’s fault. Most of the other causes can be weathered for a while if people are frugal and save money when times are good. People are going to lose jobs… it happens. Divorces happen. Medical expenses happen. Storms happen. Plan for it. Save. Don’t run up debt. If it doesn’t happen to you, then you still won’t regret having saved the money.

There are rare circumstances where an individual could be said to not be at fault for their financial condition. A major economic depression or natural disaster, for example. A lengthy, expensive medical issue, for example. But if an unexpected $5,000 bill pushes you into bankruptcy, it’s your fault. You planned poorly.

Our culture increasingly seeks to absolve individuals of any responsibility for the choices they make (see: abortion). But while the final incident that pushes someone into bankruptcy may not be their fault, the fact they were so vulnerable to bankruptcy is usually the result of a thousand bad decisions made up to that point.


2155, 16 August 2018


  1. dad29

    All my spare cash is in ammunition!

  2. Mark Hoefert

    I find this dynamic interesting, and probably true.
    Medical costs are a frequent tipping point for older bankruptcy filers, the study found.
    Although Medicare is a great start for covering seniors’ health care costs, many people don’t realize that it doesn’t cover everything, Thorne said.
    Long-term care, hearing aids, most dental treatment, eye exams for glasses and foot care are among the many things Medicare Part A and Part B plans do not cover. Medicare can also involve copays, coinsurance, and deductibles that may be difficult for some seniors on reduced incomes to afford.
    Medicare for All!  Bankruptcy for Everyone!!

  3. jjf

    Dad29, how will all that ammo save you?

  4. MaxwellsEQs


    You said that individuals are responsible for their bankruptcy and that they need to make better decisions. However, the article you cited said that the number of bankruptcies has doubled and that the number 1 reason for this was medical expenses and the number 2 reason was job loss.

    Whether or not each individual has agency over bankruptcy (or is responsible in your words) seems irrelevant. Everyone would agree that somethings are in ones control and somethings are not. If people had better jobs/security, better pensions systems, and affordable health care their would be fewer bankruptcies.  This is true whether or not the individual has some control over his fate.

    Are you aware that you enjoy displaying others peoples misfortunes while patting yourself on the back for being so sagacious and prudent?

    Congrats Owen, you can manage your money and some people either lack the ability or were never given a chance. Either case should we do something about it or laugh at their sufferings?



  5. Owen

    Nobody is laughing at anyone’s sufferings. Bankruptcy is horrible and one can acknowledge that it one’s own fault without discounting the severity of the personal crisis. At some point, we are all susceptible to bankruptcy – no matter how well we prepare.

    My point is that given the number of Americans who have little or no savings due to their own decisions to spend rather than save, they can’t blame other people when a relatively small financial emergency pushes them into bankruptcy. If you walk along the edge of the financial cliff, it doesn’t take much to push you off the edge.

    Most financial advisers, for example, recommend that you keep anywhere from 3 to 6 months of income in liquid assets to handle emergencies – then have more in less accessible assets. This enables a person to handle a normal job loss, medical expense, housing expense, etc. without stepping into bankruptcy.

    One can’t refuse to save anything for their entire life and then blame other people when an unexpected medical bill or something forces them into bankruptcy – yet we see it all the time. Some folks do everything right and are still dealt a bad hand. It happens. All I’m saying is that many, if not most, bankruptcies could be prevented by prudent fiscal management.

  6. jjf

    Shorter™ Owen:  “See, what the elderly poors need is more money.”

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