Older Americans Declaring Bankruptcy at a Rapidly Growing Pace

A depressed older woman sits with her head in her handsFor an ever increasing number of older Americans, particularly those over the age of 65, conventional ideas concerning life in retirement are being contradicted by an unfortunate reality, which is bankruptcy. Our estate planning attorneys have learned recently that more and more older individuals in the United States are turning to this last resort process when debt and financial burdens reach the point where repayment is no longer a viable reality.

Contributing factors to this undesirable solution include inadequate savings, soaring medical expenses, vanishing pensions, and the burden of taking on financial responsibility for others. As of 2018, the rate of individuals 65 years or older declaring bankruptcy is triple what it was in 1991.

Decline in Social Safety Nets

A recent study suggests that a three decade decline in the social safety nets provided by the government and employers has contributed greatly to this new bankruptcy trend. For example, there are longer waits for full Social Security benefits, more out-of-pocket spending for health care services once covered by Medicare, and the replacement of employer-sponsored pensions with personal saving plans are compounding challenges older Americans face regarding their finances.

The study, conducted by the Consumer Bankruptcy Project explains that older people have few places to turn other than bankruptcy court when their financial situation becomes near- impossible. Obviously, declaring bankruptcy can offer a new start for individuals facing such problems, but often, by the time filers complete the process, their wealth is gone and they do not have a sufficient number of years to ever get back on their feet.

Even though the actual number of older individuals declaring bankruptcy is not extraordinarily high, approximately 100,000 per year, researchers state that it is still almost triple what it was in decades past. University of Illinois law professor, Robert M. Lawless, is the author of another study. This one states that the actual number of older individuals in financial distress may be much higher, as many struggle to work in order to avoid bankruptcy.

Retirement Debt

More people are also carrying debt into retirement, which was once an uncommon situation, according to the Employee Benefit Research Institution. Not entirely surprisingly, the lowest-income households among people 55 or older are also the households that carry the worst income to debt ratios, with over 13 percent of such households facing a debt load that equals over 40% of their income.

Additionally, the finances of older Americans are being strained by the needs of others. For instance, approximately a third of senior citizens interviewed in a researchers’ survey said that assisting older parents, children, and other relatives contributed to their ultimate bankruptcy.

Responsibility for Others

Certain individuals even cosign loans for children, including student loans, and when their children are unable to pay, the burden of debt falls on the elderly parents. Other circumstances, such as a late life divorce, death of a partner, or the burden of raising grandchildren also put older Americans in situations where they cannot pay their bills and must seek bankruptcy as a last resort solution. This has created a growing need for resources to help older individuals in financial crisis.

 

 

Older Americans Technology Usage Continues to Grow

elderly couple using IpadVirtually all Americans use some type of technology on a day-to-day basis, and citizens over 50 years old are no exception to this rule. Even though many people may think that older individuals shun modern devices, smart phones, the Internet and other 21st-century must-haves, this is not the case. A new study put out by AARP indicates that adults over the age of 50 use a broad range of devices to shop, obtain information, and connect with friends and family.

Interesting Statistics

Statistics show that 91 percent of Americans over the age of 50 use a personal computer and 90 percent own a laptop. Additionally, over 80 percent of individuals between the ages of 50 and 64 have smartphones or iPhones, a percentage that is very close to that of the general population.

More than 50 million Americans above the age of 55 state that they believe modern technology enriches their lives in one way or another. Additionally, 25 percent of older adults enjoy advanced driver assistance technology in newer model cars.

Technology at Home

With regard to technology at home, approximately one out of two older Americans now own a Smart TV–a television that is Internet connected and digital–and almost 10 million plan to purchase one sometime in 2019. Older Americans are even interested in ultramodern devices such as Amazon Alexa and Google Home. A recent survey completed by AARP indicated that one in seven individuals 50 years of age or older own one of these two devices.

Various Uses for Different Types of Technology

Older individuals have distinct patterns regarding how they use modern technology. For example, Smartphones and iPhones are their devices of choice for communicating with friends and family, whether through text or voice calls. However, for entertainment and news they report using tablets went on the go. Traditional desktop PCs and laptops are used most frequently by older individuals to pay bills, search for information, schedule medical appointments or send emails.

With regard to social media, older individuals often use such venues to post pictures, send congratulations, wish people happy holidays, and connect with old friends with whom they have lost touch over the years. Some older adults even use Facebook and Twitter to “keep tabs” on their grandchildren and see what they are up to from time to time.

Wearable Technology

Regarding fitness trackers, Apple watches and other types of wearable technology, just a small percentage of older individuals are currently on board. Those under 50 are far more likely to invest in such devices than those over age 50, although this statistic may change significantly in the future.

4 Reasons Why Estate Planning is Vital Regardless of Age or Income

young couple at estate planning attorneys officeEffective estate planning is sometimes overlooked by many individuals, even those who are proficient at managing their current finances. If you have never thought about completing this task, you are inadvertently making your loved ones vulnerable to negative circumstances in the event of your death. Although proper estate planning takes time and effort, the latter is minimal when compared with the more time-consuming and potentially costly situation your loved ones may find themselves in once you are gone. For this reason, hiring an estate planning attorney to complete this task should be a priority in your life.

Avoiding Unnecessary Problems

Should you pass away without an estate plan, your heirs must attempt to reach a mutual decision concerning who gets your property and other assets. In addition, your estate will almost certainly go to probate court, where these decisions are ultimately made by a judge, leading to additional fees or even a long and complicated probate. This means that your heirs receive less of your estate than you would have designated if an appropriate plan had been drawn up by an attorney. Also included in a proper estate plan is a designated individual who is given power of attorney in the event you become injured or otherwise incapacitated. This is certainly something you do not want left to chance.

The Danger of Making Assumptions

You may also be surprised to discover that courts do not automatically rule in the manner many people assume they do, such as awarding everything to the surviving spouse. Similarly, you may assume that children always go to the nearest living relative, but this is not always the case either. Therefore, to avoid having these decisions made by a judge who is a perfect stranger, it is important to make them yourself while you are still able.

Assets

The primary purpose of estate planning is to designate heirs for your assets, but it is this term that often confuses people. Some individuals believe the word “assets” refers to large bank accounts, expansive investment portfolios, or multiple properties. In reality, however, whether you have a stock portfolio and a beachfront home or a small bank account and a modest retirement fund, it is vital to have an estate plan in place. Do not make the mistake of thinking that there is no need for such a plan simply because you are young or you do not have substantial net worth. Even if your net worth is modest, you do not want the assets you do have going to a person for whom they were never intended.

Timely Planning

It may feel as if you have your entire life to ensure that an estate plan is in place that explicitly spells out your wishes in the event of your death; however, no one ever knows when he or she is going to pass away and sudden deaths are not as uncommon as people may think. After your death, you no longer have a say regarding how your assets are distributed. The only way to control what happens after you are gone is to contact an estate planning attorney and make sure that the appropriate documents are in place ahead of time.