Will Baby Boomers have to file for bankruptcy in this economy?
When the financial markets virtually collapsed in 2007, no one really knew what to expect in the years to come. One group that has gone crazy over the economy and how the government responds to the recession is the baby boomers. No wonder this group is increasing at an alarming rate with more than 10,000 people reaching the age of 65 every day. I think that’s why the federal government is starting to get really nervous about the Social Security system. In a recent report, Social Security is expected to run a $134 trillion deficit over the next 75 years. What is frightening is that Americans in general no longer have a savings account and count on that money for their retirement. In fact, 50% of all American workers have less than $10,000 in some type of retirement account. Over the past 10 years, I’ve heard many people say that their retirement was the equity in their home. For many, the past few years have destroyed their entire wealth and even forced many of these people out of their homes through foreclosure. So much for planning on using your home equity for your retirement. Due to the economy, many baby boomers had to come out of retirement to avoid filing for bankruptcy and to continue living.
When Social Security started, a person could retire at age 62 and receive benefits. Back then, people only lived to the ripe old age of 67. This left the Social Security system in a bind for paying only a few years of benefits to that person even though that person paid for his entire lifetime. Now, the average American lives to be 77 years old, and SSI starts at age 65. According to this, the system has just been responsible for twice as much. In the grand scheme of things, the show could have worked if the money had been set aside and invested as it was supposed to have been. Instead, the money has been deposited in the general fund to be used as Congress sees fit. It doesn’t take a genius to figure out that this won’t be there in the near future because the money doesn’t exist. The sad thing is that many seniors count on this every month and without it they would have to file for bankruptcy and possibly end up on the street. Baby boomers need to wake up and smell the coffee and, if necessary, file for bankruptcy to eliminate their debt and lower their overall cost of living.
Here are some scary facts that should wake up the baby boomer generation.
- In a recent survey it was found that in the 46-64 age group, 26% of these people do not have any savings. In another survey that showed that 46% of them have less than $10,000 set aside for retirement.
- According to the Employee Benefits Research Institute, 60% of all American workers said the total value of their savings and investments is less than $25,000.
- There are currently more than 40 million seniors in the US and over the next 30 years that number is expected to double. Of these, one in six lives below the poverty line.
- To avoid filing for bankruptcy, many seniors have to continue working into their retirement years. In 1985, the number of older people between the ages of 65 and 69 who were still working was only 18%. In 2010, that number increased to 32%.
- Seniors filing for bankruptcy have increased by 178% for those ages 65-74 between 1991 and 2007. With a rising cost of living and only having Social Security to rely on It’s no wonder so many have to file for bankruptcy.
- Although cost of living is a factor, the leading cause of bankruptcy filing among seniors is medical bills. In fact, medical bills played a role in 60% of all people who filed for bankruptcy in the US Of all medical bill bankruptcy filings, 75% of people had health insurance.
I could go on and on about the economy and the US and how it will affect baby boomers preparing to retire. People really need to take a serious look at their finances and even consider filing Chapter 7 bankruptcy if necessary. Retiring in debt and relying on Social Security to survive will only end in disaster. It would be much better to eliminate these debts before having to rely on a fixed income. In a perfect world, it would be much better to be debt-free when you retire and not be saddled with burdens in your later years.
