The New York Times recently shared data on an alarming increase in elderly bankruptcy filings. Between 1991 and 2016, the rate of bankruptcy filings by seniors who are at least 75 years old tripled, while those between 65 and 74 grew by 200%, according to a study by professors using data from the Consumer Bankruptcy Project.
Why Senior Bankruptcy Filings Are On The Rise
There are many catalysts for this dramatic increase in senior citizen bankruptcy, including an uptick in longevity resulting in higher lifetime medical expenses, a decline in pension reliability, a shrinking social safety net and shifting Social Security eligibility.
Even seniors who were proactive in contributing to a 401(k)-based retirement plan have been hit hard by economic volatility. And let’s face it, even with 40 years of consistent contributions and a generous matching plan from employers, timing the market successfully is mostly a hit-or-miss game of luck.
While periods of growth certainly offset shrinking portfolios, there are many seniors who simply do not have enough socked away to make it through retirement and end-of-life care.
Seniors Are Faced With Financial Obstacles in Retirement
Seniors have turned to part-time employment and even new careers in order to work well beyond 65. Unfortunately, finding a well-paying job in retirement is next to impossible. That means that many seniors have turned to low-paying and menial part-time gigs in order to make ends meet.
Even with working much further into their life, countless seniors are still faced with mounting debt and are increasingly susceptible to fraud and predatory tactics by those seeking to take advantage of their desperation.
The increasing financial pressure on seniors has turned many to lean on their children and siblings, as well as cohabiting to reduce expenses.
How Seniors Can Avoid Bankruptcy
There are legitimate ways for seniors to overcome financial obstacles and avoid bankruptcy, without falling prey to unscrupulous actors. Divesting portfolios, selling unnecessary property, and down-sizing their lifestyle are all great ways to conserve resources. Another option for seniors facing economic uncertainty that many overlook is the fact that they could sell their life insurance policy.
In a life settlement transaction, policyowners are able to tap into the market value of their life insurance policy by selling it to a third-party investor. In fact, sellers receive on average 400% more cash for their policy than they would get from surrendering it.
A life settlement is one of the best ways for policyowners to improve their financial situation without committing to years of labor or risking further financial disaster. A policy evaluation doesn’t cost you anything, and there is no commitment to sell if you aren’t happy with the valuation. You can even sell your existing policy in exchange for a cash payout while also receiving a smaller life insurance policy to cover final expenses.