Certain populations see higher bankruptcy risk than others, and senior citizens are one of those populations. Here is a look at some key factors that make bankruptcy more common among the elderly population.
Healthcare costs
Medical debt is a leading cause of personal bankruptcy in the United States, and senior citizens are no exception. While Medicare is designed to cover basic healthcare costs for people over 65 years of age, it is by no means comprehensive. Medicare only covers short-term home health care for certain individuals, for example, and it does not at all cover long-term home health care. So, if you are a senior citizen who needs home health care in an assisted living facility, you are going to have to finance that on your own. Long-term home health care is not cheap, either; in 2013, the average annual cost of a private room in a nursing home was $94,170. Many seniors must resort to credit card debt or loans to pay for needed treatment.
Disability
Some people do not set aside as much money for retirement, under the assumption that they are going to continue working beyond retirement age. Unfortunately, however, many grow too ill to work or physically incapable of work as they get older. This results in a major loss of income, which in turn can send someone on the path toward bankruptcy.
Decreasing pensions
Decreasing pensions are another contributing factor to rising bankruptcy rates among seniors. Fewer and fewer companies are offering pensions as a standard benefit, meaning that seniors are entering retirement with less and less money set aside. Pension combined with Social Security is simply not enough to cover basic living expenses. This causes seniors to use credit card debt to pay for basic expenses, only for that debt to accumulate over time until bankruptcy hits.
Scams
Scams may not be the number one cause of bankruptcy among seniors, but they are definitely a contributing factor. Senior citizens are unfortunately the target of many scams, as they typically expect honesty in the marketplace and are less likely to take action when defrauded. Some of the most common types of scams targeting seniors include telemarketing scams, email scams, lottery scams, and “sweetheart” scams. These scams can rob senior citizens of thousands of hard-earned dollars.