Debt for the Elderly

It was reported in the Birmingham News on Saturday, July 21, 2007 that bankruptcies have increased for older Americans, specifically 55 and older.  Many of these older individuals spent their lives paying their bills on time, but these Americans were unable to save enough for retirement as a result of an increase in expenses and unexpected costs.  As a result, these people have turned to credit cards and increased their debt load.

What causes these increased debts?  healthcare, not enough social security income, helping adult children, and the death of a spouse.  Healthcare is obviously a big issue in this country, and given the fact that people are living longer lives, the cost of their care is an enormous drain on their assets.  Many of these individuals require assisted living at some point which is a risk in and of itself given the poor staffing of nursing homes.  Obviously, in-home help would be better, but often, Medicaid and Medicare are the only options, and these sources will not pay for in-home care.

What do we do about this problem?  That’s a difficult question to answer.  First and foremost, something must be done about the credit card industry.  Credit is given too easily without making sure individuals meet certain debt to equity/income ratios.  We have seen what happened in the mortgage industry with subprime loans – foreclosures out the wazzou.  If we are not careful, the same thing is going to happen with personal, unsecured debt.

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