In recent years, there has been a notable increase in the number of seniors filing for bankruptcy across the United States. This trend underscores the financial challenges faced by older adults and highlights the complexities of planning for retirement amidst economic uncertainties. Traditionally, many individuals in their sixties and beyond could rely on pensions that could not be reached by creditors, but various economic and societal shifts have made seniors much more susceptible to the forces that require individuals to seek bankruptcy protection.
Some of the reasons why older Americans now file for bankruptcy more include the following:
- Inflation’s effect on people with fixed incomes — Many seniors live on fixed incomes from Social Security or retirement savings. As living costs, including healthcare expenses, housing and utilities, continue to rise, these fixed incomes may no longer suffice, particularly as fewer and fewer employers provide pensions. The gap between income and expenses can lead seniors to consider bankruptcy as a means of managing overwhelming debt.
- Medical expenses — Healthcare costs are a significant factor contributing to senior bankruptcies. Despite Medicare coverage, many seniors face high out-of-pocket expenses for medical treatments, prescriptions and long-term care. Unexpected medical emergencies or chronic health conditions can quickly deplete savings and push seniors into financial distress.
- Unexpected events — Life is unpredictable, and unforeseen events such as divorce, the loss of a spouse or the need to assist an adult son or daughter can affect older Americans’ financial stability.
- Retirement planning shortfalls — Insufficient retirement savings or inadequate financial planning during working years can leave seniors vulnerable to financial crises later in life. Without adequate savings or investments, seniors may struggle to maintain their standard of living during retirement, prompting them to consider bankruptcy as a way to manage debt.
Social Security benefits are generally protected from creditors in bankruptcy. However, the timing of filing and the structure of retirement accounts can affect how these benefits are treated. Consulting with a knowledgeable bankruptcy attorney can clarify these issues.
The increase in senior bankruptcy filings reflects broader economic challenges and the unique financial circumstances facing older adults today. If you or a loved one is considering Chapter 7 or Chapter 13 bankruptcy due to financial hardship during retirement, our experienced team at Jeff Field & Associates can examine the situation and advise on the best way to secure lasting debt relief. Please call 404-381-1278 or contact us online for a consultation. We have offices located in Athens, Douglasville, Gainesville, Lawrenceville, Marietta and Scottdale, and we also work with clients remotely.