A study of rising bankruptcy rates among older Americans places blame squarely at the feet of a hollowed-out safety net and policy changes that have left people without adequate retirement savings, paying huge out-of-pocket medical expenses, and seeing their funds dwindle due to the student loan crisis that many people mistakenly believe affects only younger generations.
When comparing the rate of bankruptcy filing among Americans 65 and older now versus in 1991, "the only explanation that makes any sense are structural shifts," Deborah Thorne, lead author of the Consumer Bankruptcy Project's recent study, told the New York Times.
Entitled "Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society," the group's report found that older Americans filed for bankruptcy three times as often from 2013 to 2016 as they did a quarter of a century before.
Those surveyed for the study blamed multiple factors beyond their control for their decision to file. According to the Times, "About three in five said unmanageable medical expenses played a role. A little more than two-thirds cited a drop in income. Nearly three-quarters put some blame on hounding by debt collectors."
Many large U.S. employers have suspended or reduced contributions to 401K savings plans in recent years--already having shifted away from traditional, more secure pensions--while out-of pocket healthcare costs have risen faster than incomes.
The student loan crisis has also played a role for many filers, with more than a third saying they were driven into bankruptcy after shelling out huge sums of money for family members. With college costing many families tens of thousands of dollars, bankruptcy lawyers are encountering parents who have guaranteed loans that they are no longer able to pay back.
"I never saw parents with student loans 20 or 30 years ago," Marc Stern, a lawyer in Seattle, told the Times. "When you are living on $2,000 a month and that includes Social Security--and you have rent and savings are minuscule--it is extremely difficult to recover from something like that."
Norm Eisen, chair of Citizens for Responsibility and Ethics in Washington, blamed the Republican Party for pushing many policies that force working Americans to shoulder economic burdens that in previous generations were more often the responsibility of the government.
Since President Donald Trump took office in 2017, his administration and Republicans in Congress have pushed to offer short-term health insurance plans that leave patients responsible for the cost of prescriptions; limit the amount of income Americans can save each year in retirement accounts; and made it harder for defrauded students to get loan relief.
While some may point to a larger population of older Americans as the reason behind more people filing for bankruptcy, the study dismisses the notion.
"The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect," wrote the authors.
Instead, a "three-decade shift in financial risk from government and employers to individuals" is to blame "as the social safety net shrinks," wrote Tara Siegel Bernard at the Times.
Fayrouz Saad, a progressive running for Congress in Michigan's 11th district, wrote on Twitter that reports like the one published by the Consumer Bankruptcy Project should serve as a reminder to all Americans that bold progressive action and political will are what will strengthen the social safety net.
