The share of bankruptcy filers who are older than 65 is the highest it’s ever been.As the cost of living outpaces incomes, health-care costs rise and debt swells, there’s been more than a twofold increase in the rate of older Americans filing for bankruptcy, according to a new study. “For an increasing number of older Americans, their golden years are fraught with economic risks,” it reads.
The average monthly Social Security check is $1,404, and more than 40 percent of single adults receive more than 90 percent of their income from that check, according to the government. Older Americans’ debt can threaten this.
The number of Social Security recipients 65 and older who had their check reduced because of their student loans increased by more than 500 percent between 2002 and 2015, according to the Government Accountability Office.“There’s just fewer options you have at that stage of the game,” said Justin Halverson, a financial advisor and co-founder of Great Waters Financial in Minneapolis.
But the situation is far from hopeless. Here’s what you can do.
1) Get your budget in order
Mapping your expenses will help you see where, and if, you have room to chip away at your debt, financial experts say. Doing so will also make it more likely that you stick to a budget, and therefore avoid falling deeper into debt. The National Council on Aging offers the Economic Check Up, a website where users can obtain a free personal report on money management and budgeting. (There is also a job search at the site.)
Plug in a few simple questions on the council’s Benefits CheckUp page and the online tool will screen your eligibility for thousands of benefits for seniors, including meal deliveries and myriad potential tax savings, that could help you to pull down your overhead. To brace for coming health-care costs and possibly find ways to save on them, check out AARP’s health-care cost calculator. For Medicare specific information, go to My Medicare Matters.
2) Do what you can
As for that debt issue, Halverson recommends reaching out to creditors to find a way to negotiate more favorable terms. “If you have debts with a hospital, I’ve heard stories where people have called in, told them their situation and the hospital was able to forgive some of the debt,” Halverson said. “Open communication is always going to be a good thing.”
Similarly, if you foresee problems paying your mortgage, contact your financial institution as soon as possible, said Lori Trawinski, director of banking and finance at the AARP Public Policy Institute. “If you wait until you’re three or four months delinquent, it’s much more difficult to get help,” Trawinski said.
Also, financial experts recommend that you try to at least make the minimum payments on your credit card. By doing so, “you’re not having actions taken against you,” said Craig Copeland, a senior associate with the Employee Benefit Research Institute.
But keep in mind that the less you pay, the longer you’ll be stuck with a debt — and, thanks to interest accrual, the greater it will become. So pay more if you can and look to avoid using that credit card all together.
Also make sure your rights are not being violated. The Consumer Financial Protection Bureau offers information on how to protect yourself from collection agencies.