NEW YORK–There has been a two-fold increase in the rate at which Americans age 65 and over file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system, according to new findings from an ongoing study.
According to the report, “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” from February 2013 to November 2016 there were 3.6 bankruptcy filers per 1,000 people 65 to 74; in 1991, there were 1.2. In addition, 12.2% of filers are now 65 or older, up from 2.1% in 1991.
“The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect,” said the authors of the new report. “In our data, older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of healthcare, as they try to deal with reductions to their social safety net. As a result of these increased financial burdens, the median senior bankruptcy filer enters bankruptcy with negative wealth of $17,390 as compared to more than $250,000 for their non-bankrupt peers.”
The study’s authors added that “For an increasing number of older Americans, their golden years are fraught with economic risks, the result of which is often bankruptcy.
Additional Findings
The analysis was conducted by Pamela Foohey of the Indiana University Maurer School of Law, Robert M. Lawless of the University of Illinois College of Law, and Katherine M. Porter of the University of California-Irvine School of Law. Helping to drive the trend, the reports suggests, is the ongoing shift of financial risk from government and employers to individuals, as well as a shrinking safety net.
“When the costs of aging are off-loaded onto a population that simply does not have access to adequate resources, something has to give,” the study states, “and older Americans turn to what little is left of the social safety net — bankruptcy court.”
Although the actual number of older people filing for bankruptcy was relatively small — about 100,000 a year during the period in question — the researchers said it signaled that there were many more people in financial distress, according to the researchers.
The study’s findings are based on a sample of personal bankruptcy cases and questionnaires completed by 895 filers ages 19 to 92.