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Is Bankruptcy in Your Future?

Is Bankruptcy in Your Future?

According to U.S. Bankruptcy Court data, 819,159 people filed for bankruptcy in 2016. Although that is down 6.9 percent from 2015, Debt.org reports that people 55 and older account for 20% of those filings, a number that has doubled among seniors since 1994.

Overall, personal bankruptcies are on the decline.  However, the number of seniors filing for bankruptcy has reached record numbers. That is a terrible thing to have to face in your later years. According to the article “Planning key to avoid becoming a bankruptcy statistic in retirement” from nwi.com, this unpleasant fate can be avoided. However, it takes early planning.

For starters, people need to do a complete financial analysis. This includes a hard look at current and potential future health care costs, which can decimate even the best retirement plan. That means planning for early retirement, long before Medicare is available. Resources may include a younger spouses’ COBRA, contributing to a Health Savings Account and any coverage gap that may occur between the time the person retires and when they reach age 65 and are eligible for Medicare.

Planning needs to start early, so include the cost of college education for your children and planning for retirement. Saving rates slow down during retirement, so getting started on saving early is critical.

A financial plan can expose shortfalls. People may not want to consider themselves at risk. There is a strong tendency to procrastinate, thinking that there is enough time to catch up. The sooner you start planning, saving and facing reality, the better your chances of not filing for bankruptcy.

Another reason for the increasing rate of bankruptcies is that we are all living longer. That’s a great thing but it also means that health care costs are increasing, especially long-term care.

Medicare does not cover long-term care, including assisted living, memory care and the need for nursing home care. It does not cover routine eye care, dental care or hearing aids.

The national average costs for long-term care in the U.S. in 2016 were $225 a day or $6,844 per month for a semi-private room and $253 a day or $7,698 per month for a private room. All other health care costs have been increasing 6% annually, according to the Center for Medicare and Medicaid.

As a nation, we spent $3.2 trillion for health care in 2016. Those cost increases make planning a challenge for seniors and their families.  Therefore, many unforeseen issues occur.

Another reason for the increase in bankruptcies among seniors is the “unwanted retirement.” Many older workers were downsized during the Great Recession and 60% of retirements were unplanned, according to a survey from TransAmerica. Downsized workers took on debt to survive and are now entering the next phase with expenses they did not count on having. 

Many returned to the workforce, but at lower salaries. The Bureau of Labor Statistics says 36% of those 65 and older are still working—and 20% of those who are 70 and older are still working. When a low paying job and Social Security are not enough to cover costs, bankruptcy becomes the only option. 

Reference: nwi.com (Sep. 16, 2018)“Planning key to avoid becoming a bankruptcy statistic in retirement”

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“On the threshold of retirement, we finally decided to quit thinking we could self-prepare the requisite documents. We had previously had only a very simple will. We needed the necessary legal (including updated will) & health care docs but didn’t want to deal with the time & complication of legalese. Cindy made the process relatively painless. She took the time to explain and answer questions without trying to upsell services. We were done in 2 meetings plus the reading of emailed drafts. In addition to preparing the documents, Nelson Eldercare will be there when our adult children need advice on executing the plans we’ve put in place.So glad it’s behind us and would recommend Cindy and her helpful staff.”

- Bonnie

Cindy and her company treat their clients like family. Nelson’s offers clear, direct, and honest guidance in planning for your families security and future. No one wants to actively sit down and make these decisions, but Nelson’s makes this process seamless. I was so impressed with their willingness to answer all questions big or small. So glad I made the decision have them help my mom and dad and now me. You can’t go wrong with Nelson’s Elder Care Law.

- Hope

The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!

- Kerri

I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.

- Charlotte

Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.

- Pierce