The baby boomer generation is filing bankruptcy at a rat far higher than any other group in America, according to the American Bankruptcy Institute’s ABI Journal. Baby boomers between the ages of 45 and 64 made up 42 percent of all bankruptcy filings in 2007. That number had increased by 65 percent since 2002. It’s predicted that the number of baby boomers filing bankruptcy in the future could top 50 percent as the generation faces mounting debt issues and shrinking economic opportunities.
Below are three major reasons why more baby boomers are in need of bankruptcy protection:
- The housing crisis. The baby boomer generation is facing falling home values while also finding themselves tethered to mortgages that are far from being paid off. During the boom, we saw many baby boomers in their 50’s or even 60’s taking on mortgages that had a 30 year term, creating a situation where they would be nowhere near paying off their mortgage by the time they reached retirement. Many of these debtors, who eventually filed bankruptcy, didn’t foresee the foreclosure crisis, the devaluation of their homes and some were even sucked into toxic mortgages that increased their monthly payments after a certain number of years. It is the combination of these housing crisis minefields that have pushed many baby boomers into bankruptcy.
- Rising healthcare costs and fewer benefits for their money. The reality of our current healthcare system is that you get very little for the money you pay out, especially as you get older. Many baby boomers are finding that they must pay very high premiums and end up with medical debt despite having health insurance. Even if the debtor has not yet retired, paying off medical debt can be impossible due to low wages and other expenses. This is why medical debt is still one of the leading causes of bankruptcy.
- Astronomical credit card debt and no way to pay it because of unemployment or underemployment is another important factor in bankruptcy’s rise amongst baby boomers. The recession brought with it a high unemployment rate for baby boomers and large credit card debts. Many baby boomers find themselves saddled with tens of thousands of dollars in credit card debt, leaving bankruptcy as their only way to survive financially.