Bankrupt senior citizens, brought to you by Republican privateers

Courts today are seeing an epidemic of bankruptcies among older adults, a direct result of eight years of Republican profligacy and disdain for the middle class. Richard Burr and Virginia Foxx think "the cure" is to keep on doing what George Bush did.

The average age for filing bankruptcy has increased, and the rate of bankruptcy filings among those ages sixty-five and older has more than doubled since 1991. The implications of a sharp rise in the proportion of older Americans in bankruptcy are particularly problematic because, unlike their younger counterparts, older Americans typically have fewer years left in the full-time workforce. Consequently, they will have a far more difficult time recovering from financial collapse.

Younger people may well have another thirty years or more in the workforce after their bankruptcy filings, years in which they can rebuild retirement accounts, pay off mortgages, set aside some savings, and otherwise reestablish their financial security. Some will take on a second job or return to school for additional training. Unfortunately, those options are typically closed to people in their later years, who find themselves with few assets and unmanageable debts.

The bankruptcy data may also signal a significant change for intergenerational familial economic relationships. Specifically, when young adults experience financial struggles, they often rely on their parents for help because parents usually have more assets and fewer expenses. But the bankruptcies of older Americans may signal the loss of intra-family safety nets for their children and grandchildren alike. These changes may alter traditional social structures, reducing the number of families who can manage periods of financial stress without turning to public resources. The rising proportion of older Americans in bankruptcy may warn of other social and economic problems.

Our previous research indicated that medical problems are implicated in many of the bankruptcies of senior citizens. More recent issues, however, may foreshadow even greater numbers of bankruptcies among older debtors. The data we report on here were collected before the sharp reverses in the stock market that devastated many retirement plans. People who had assets to cushion the blow of rising housing costs or to deal with the unpaid portion of medical bills may now find themselves taking on debt, debt that makes them vulnerable for future bankruptcies.

However, the fact that previous generations show a sharp rise in filings among those in early middle age may signal instead that people are living with financial stress for years, putting off the day of reckoning in bankruptcy for as long as possible. For example, reports have surfaced about rising numbers of elderly who cannot move into retirement communities because they cannot sell their homes; as a result, retirement communities have too many vacancies and older people who need care facilities are stranded in their homes.