The number of Americans aged 65 and older are filling for bankruptcy more than any other demographic according to a recent study by John Pottow, professor of law at the University of Michigan Law School.
Data from the Consumer Bankruptcy Project shows that the number filers age 65 and over doubled from 2.1% in 1991 to 4.5% in 2001. The trend continued in 2007, as the proportion of filers in this age group rose further to 7.0%. According to the study, the phenomenon is driven mostly by credit cards, which 66.6% of the elders said was the reason for filing, followed by medical reasons.
In sum, elder debtors are not just growing in number, but they seem to have more credit card debts and cite credit card problems as their reason for filing bankruptcy more frequently than any other age group.
Background data on employment motivations augment the view that these elder debtors in bankruptcy are in tough economic straits. A little more than one-third of elder CBP filers reported that they had retired but then returned to the workforce.
When asked why they returned to work, only 35.9% said it was for love of work; three quarters (74.4%) candidly admitted it was because they needed money to cover everyday expenses, and almost one-fifth (18.0%) explicitly said it was to earn money to pay for health care and medical expenses (with 15.4% also saying it was to get health insurance benefits).
The growing number of elders filing for bankruptcy could be “warning us of problems that will become even worse as the baby boom cohort enters these income-restricted and support-network-deteriorating senior years,” said Pottow.
“That may require reconsidering the levels of public support we guarantee our retired members of society – a political question much too daunting to undertake in the scope of an article reporting bankruptcy data, but a difficult question we will ultimately be unable to avoid.”