Senior Troubles: Bankruptcy on the Rise

The rising costs of health care and consumer goods have hit the elderly population hard.  A clear indicator that the older popular is struggling is the rise in senior bankruptcy rates, which are reaching double-digit territory.  In this difficult economy, our 55-plus population needs to seriously reevaluate how they'll make ends meet.

According to a Consumer Bankruptcy Project analysis, bankruptcy rates among adults over 55 have increased from 8 percent in 1991 to 22 percent in 2007.  This startling escalation can be attributed to a number of factors, including the effects of inflation and the decline in home values.  It's a sign that seniors need to seriously reevaluate their budgets if their golden years aren't tarnished.

Who stole my golf cart?    

In the past, the road to retirement seemed relatively simple.  You worked hard, paid your taxes, and then enjoyed the government pension fund that was Social Security.  Most Americans couldn't wait to retire and spend their leisure years cruising in a golf cart.

That model worked decades ago, but today's seniors can no longer make ends meet with a meager Social Security check.   While many have socked away dollars in their 401(k) plans or company pensions, it's been difficult for many seniors to keep up with the sky-high costs of prescription drugs and health care.  To add to the problem, seniors credit problems aren't going to be made any easier with the housing crisis, which has stripped many of them of their home equity and made their homes more difficult to sell.

Credit solutions for seniors

Everyone shares in the challenges of seniors credit problems.  As the baby boomer generation retires, more people will demand entitlements from our government. Medicare and Medicaid will be stretched to the breaking point, and our health care system will scramble to keep up with the need for new and improved services.

Relying on the government to provide solutions to the situation is a recipe for disaster.  Seniors need to focus on how they can get their own financial house in order.  The first order of business is to deal with debt problems and spending.  By creating a budget, a senior may find areas where he or she can reduce expenses.  

They also need to look for new ways to finance their lifestyles.  To boost cash flow, they may want to take on a part-time job for added income, or use a reverse-mortgage to tap accumulated home equity.  Unless our elders have already tapped their equity to finance a lifestyle beyond their reach, their homes may have enough value to help them get back on their feet.

The most important thing for seniors to do is to take control of their finances. They need to carefully evaluate their current investments, and consider how they'll help fund a cozy retirement.  Meeting with a financial planner and discussing their many possible options can save a senior from bankruptcy and extensive long-term pain, and it could make that cozy golf cart a possibility once again.