It is rather a sad state of affairs that Los Angeles is one of the cities that has an increase in the number of bankruptcy filings from the citizens who are above 55 years of age. This number has only doubled since 1994. Despite the need to rest after years of employment, the country witnesses this stupendous rise of close to twenty percent of the total bankruptcy filings to be of the retirees. But professionals say that it isn’t surprising – the failure of the individuals (close to 32%) in setting aside a retirement amount is the major contributing factor.
The key reasons why seniors file for bankruptcy are medical expenses and credit card bills. Let’s discuss this more:
Medical Expenses:
Here’s a fact that may startle you!
In 2015, the Kaiser Family Foundation uncovered that approximately 1 million people have declared bankruptcy citing the piled up medical bills and expenses. This probably includes the majority of the Americans who have health coverage for the complete year and yet are unable to pay off their medical bills.
With age, the income sources decline but yet the medical expenses post-retirement will rise exponentially. The Employee Benefit Research Institute did a study in 2015 and the outcome mentions that a married couple would require $392,000 if they are on regular prescription drugs and that they are able to cover 90% of the related expenses post their retirements. Please note that the exorbitant amount is not accounting for long-term health care that is needed in old age. Many believe that Medicare will be their ultimate savior but it is quite unfortunate that there are exclusions in Medicare – eye care, dental care, and long term health care is not covered by Medicare. If you are looking at a semi-private room in a nursing home for long-term treatment, it costs about $225 per day and hence the high medical expenses that are needed to be borne by the individual. Besides, all high deductibles are to be paid by the seniors before the insurance starts for them.
Credit card Debts:
High credit card debts are another major reason for the senior folks to file for bankruptcy. Most of the crowd would have accrued larger debts on their credit card prior to their retirement. Now that there is a decline in the income, they struggle and fall back on their payment schedules. Not just this, but there are very minimal savings for the retirement time of the seniors and they don’t do a good job in planning well in advance for the same.
The new trend, as reported by Demos National Survey on Credit Card Debt, is the increase in the credit card debts among the people of age 50 or more compared to the younger Americans. These seniors also fall under the category of middle-income earners. In other cases, retirees turn afresh toward credit cards when they encounter the income decline – especially for basic expenses involving food and gasoline. Seniors have also been benevolent to their children and grandchildren – pampering them with financial help with their own credit cards. Some seniors resort to paying off the medical bills using credit cards as they fall short of the amount during their illnesses.
Here are some tips to plan the future that every citizen hopes for – well secured and free of debts. Planning and securing the future will be the best course of action for seniors to adopt.
Financial Planning
The advised course of action, especially if retirement is fast approaching, is to plan ahead of what will be needed financially for your future. The medical expenses are to be considered as every person faces unforeseen emergencies even in the best of their health conditions. The expenses for the future may not be predicted when you are living a simple and healthy life currently – life may throw medical emergencies at you as well as other expenses that need immediate attention.
Whilst you are earning, plan on a budget that includes saving for the phase of retirement. It is wise to keep an emergency fund that will help you manage toward situations of unemployment, health needs, vehicle demands for at least six months. This amount will only increase as we age and plan to double the emergency fund value in a year of saving. Health Savings Account (HSA) is also a recommended idea and they come in handy for those expenses that are generally not covered by Medicare – preventive healthcare like eye exams and dental procedures. The money in the HSA can be withdrawn without any tax.
Further assistance for Seniors in Debt
Are you seeking further assistance as a senior citizen and who is challenged by debts in California state? Recovery Law Group can work with you to resolve the issues at hand. Their team of bank attorneys who operate from Los Angeles and also Dallas, Texas are aware of the common problems that seniors and retirees face with debts.
Here are some tips to aid and direct you better:
- All high-interest rate debts need to be cleared off on priority
- A payment plan that is effectively negotiated between hospitals and medical providers can help you clear off all medical debts that you owe. Don’t compromise for a medical credit card as you may incur more debts with it.
- Be vigilant of your expenses and maintain the same meticulously within budget. There are articles and apps that will help you do the same.
- If there are piled up credit card bills, check the feasibility of a repayment plan without interest or penalties. This needs to be negotiated with the bank who has issued your credit card.
- A non-profit credit counselor is someone who can help you with more insights – consult one if possible
- A reverse mortgage can also be a viable option to consider but it depends on the financial situation that you are in
- Plan for the worst and plan well ahead
You can reach out to this team at 888-297-6203 and they are sure to come to your assistance!