Editor's Note: Below is an excerpt from a recent institutional research note written by our Demography analyst Neil Howe. To access his research email sales@hedgeye.com.
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The rate of 65- to 74-year-olds filing for bankruptcy has tripled since 1991. The most common reasons cited were high medical expenses and inadequate income—factors that are only going to worsen as more late-wave Boomers age into this bracket. (via The New York Times) |
Personal bankruptcy is what happens when you hit bottom without a safety net. Over the last 25 years, bankruptcy laws have been tightened and bankruptcy rates have declined for every age bracket under 55. That makes the senior bankruptcy boom even more remarkable.
As a share of all bankruptcy filings, incredibly, Americans 65+ have sextupled--from 2.2% to 12.2%.
Drivers include:
- Greater income and wealth inequality, which often leaves noncollege Boomers with declining living standards;
- Lack of employer-provided health insurance, a huge risk for anyone under age 65;
- The shift to DC pension plans, which are often hoovered out before retirement by divorce, health bills, or dunning for kids' college loans they once cosigned.
Oh yes, and a lot more debt, especially mortgage debt.
Back in 1991, only 28% of homeowners age 60-64 still had mortgages; today, 60% do. Since Boomers are a generation of worsening economic trends, first birth cohort to last, this problem is going to get worse over the next decade before it gets better. And first-wave Xers are still only 57.
