Medical bills cause bankruptcy rates to soar for older Americans

The number of bankruptcies for people older than 65 has gone up 204 percent between 1991 and 2016, a recent study finds, and one of the main causes is skyrocketing out-of-pocket medical expenses.

A recent study found a two-fold increase in the number of Americans age 65 and older who have filed for bankruptcy and a five-fold increase in the number who are in the bankruptcy system.

The study, conducted by Boston College, found that in 2014:

  • The average out-of-pocket spending was $4,274 with about two-thirds spent on premiums
  • Out-of-pocket expenses took 34.3 percent of the average retiree’s Social Security income and 17.8 percent of their total income
  • Out-of-pocket expenses cost 18 percent of retirees more than 50 percent of their Social Security income, while the expenses cost 6 percent of retirees more than 50 percent of their total income

What the experts say

The decades-long shrinking of the social safety net has caused many Americans older than 65 to go bankrupt.

Most older Americans have savings, work income, pension income and Social Security benefits. The median amount is $60,600, found, although for the bottom 25 percent that amount is only $3,260.

More Americans are carrying a mortgage into later years – 41 percent in 2016 as opposed to 21 percent in 1989, the study found.

Experts also say that more older Americans are shouldering another form of debt: student loans they co-signed for their children.

An increase in bankruptcy

Seniors can usually cope until they run into an unexpected expense. The study found that for three seniors in five, that is usually a medical expense. And with that medical expense comes high premiums and gaps in coverage that push those with lower incomes and savings into bankruptcy.

For most seniors, the best advice is to get advice before you reach a crisis. If you fear you may be headed toward bankruptcy because of mounting expenses on a fixed income, seek out professional advice from a qualified attorney.