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Dying With Debt: The Hidden Financial Crisis

Thursday, June 13, 2013 - 7:18 AM
From The Fiscal Times:
If you’re counting on an inheritance, you might think again. Recent data show that more older adults today are in debt than before. A study earlier this year from the Employee Benefit Research Institute found that the percentage of households with credit card debt headed by someone age 75 or older doubled from11 percent in 1998 to 22 percent in 2010. And a 2011 University of Michigan Law School study found that those 65 and older are the fastest-growing segment of the U.S. population filing for bankruptcy and they carry 50 percent more credit card debt than younger debtors.

In addition to credit card debt, today’s older Americans carry loans that were rare in the past for their age group. Fourth-quarter 2012 data from the Federal Reserve Bank of New York show that 2.2 million adults age 60 and older have student loan debt—with one in eight delinquent on payments. And since 1989, the proportion of those older than age 75 with mortgage debt has quadrupled.

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7
pearlbrownpearlbrown1,356 posts since
Nov 2, 2010
Rep Points: 5,955
1. Thursday, June 13, 2013 - 8:14 AM
"More than 46 percent of seniors die with “virtually no financial assets,” according to a 2012 research paper by MIT economist James Poterba, Dartmouth College economist Steven Venti, and Harvard University economist David Wise.

“This group relies almost entirely on Social Security benefits for support in retirement,” the paper concludes. “These persons balance on only one leg of the oft touted three-legged stool that is said to provide retirement support—Social Security, pension benefits, and personal saving.”

http://www.thefiscaltimes.com/Art....aspx#page

With the demise of defined pension benefits and personal savings either low, non-existent or depleted by medical bills, this situation will only worsen going forward.  Living on credit cards, and never paying them off, appears one of the few alternatives for survival for many of these folks.  Unless they can get into a long- term care facility on Medicaid to live out their remaining years.
8
ShorebreakShorebreak2,378 posts since
Apr 6, 2010
Rep Points: 12,696
2. Thursday, June 13, 2013 - 11:35 AM
That is an entertaining thought: Leave the society with some debt.  That'll teach them some good lessons on lending. 

Soon all the mortgage, credit card/loan applications will have an addtional factor to screen: Likely/time horizon of death as a risk for default.
3
51hh51hh1,462 posts since
Jan 16, 2010
Rep Points: 6,352
3. Thursday, June 13, 2013 - 1:05 PM
Shorebreak:  "  More than 46 percent of seniors die with “virtually no financial assets,” according to a 2012 research paper by MIT economists"

This probably has nothing to do with the fact that they did not have savings but ended up in nursing homes where they had to forfeit practically everything and then end up on Medicaid.  I think the article should have read: More than 46 percent of seniors die in nursing homes with virtually no financial assets. 

That would probably be a fairer indication of what the real problem is, imo.
3
paoli2paoli21,146 posts since
Aug 10, 2011
Rep Points: 5,113
4. Thursday, June 13, 2013 - 1:34 PM
I like running those programs that show you how long your retirement savings will last. The trick is adjusting the data input to have no savings left the year your demise is anticipated.

http://www.calcxml.com/calculator...gs-last#to
4
ShorebreakShorebreak2,378 posts since
Apr 6, 2010
Rep Points: 12,696
5. Thursday, June 13, 2013 - 2:53 PM
SB:  And do those programs allow for anything left to leave to a loved one?  They would have a hard time figuring out how many years I have left but I know it just goes by a "normal" equation and I am far from normal. 
2
paoli2paoli21,146 posts since
Aug 10, 2011
Rep Points: 5,113
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