Think back to when you first bought something on credit or took out your first loan. You probably thought debt was a temporary measure, and that as you grew older, you would pay off your debts and save for your retirement. You would never have believed you would be considering bankruptcy when you were close to retirement age.
Unfortunately, bankruptcy has become increasingly common among those over 55 years old. A study from the University of Illinois showed it had risen hugely between 1991 and 2016. 66% for those aged 55 to 65, and an incredible 204% among those aged between 65 to 74.
Why has this happened? While your grandma’s generation may have been more frugal, because they had experienced the post-war depression of the 1930s, there is a lot more to it than that. Most people interviewed by the researchers blamed their need to file for bankruptcy on more than one cause. Here are some of the reasons the study found bankruptcy was increasing among over 55s:
- The age you can claim social security or pensions has risen.
- Fewer people now get a pension plan from their employer.
- Wages have not risen in alignment with the cost of living.
- People have to spend more of their money on health care.
Bankruptcy can work well for many people. It is an opportunity to get a clean start and rebuild your savings for your retirement. However, the closer you are to retirement age, the harder it will be to do that. There may not be enough time to build up the funds you need to retire. Seek legal help to understand if bankruptcy is right for you.