Bankruptcy

One of the saddest senior moments is when the checkbook runs dry. We all know seniors run the gamut from poverty to wealth with most of us probably somewhere between.

When the bank calls to announce that we are overdrawn it could be an error. Perhaps the check got lost in the mail. Maybe the bank deposited it into the wrong account. Maybe it was sent unsigned. Lots of maybes. But when it happens it is usually a sinking feeling, comparable to the warning from the utility company that the water or gas or electricity will be turned off.

It is no deep dark secret that even seniors can go broke. Some may file for bankruptcy, usually not at first, but it can and does happen. If going broke is due to an error, it can still be aggravating, disheartening, or worse. But if it is real, it can be an awful feeling, a senior moment of the worst kind. We're told that this dilemma began growing in the 1990s and has only worsened.

How can this happen? I remember while serving as a chaplain in a retirement community there was a real reluctance among certain seniors to take risks. When CDs were doing extremely well, the income was adequate. And fixed. But as the CDs drifted downward, the income could become inadequate, and difficulties followed.

Nest eggs can seem to be luxurious at first but some seniors forget about those rainy days and spend too much. I remember a cocky senior who retired way too early thinking he was rich but ran out of money. He was supported for years by his son-in-law. Should seniors save? If they live modestly and plan to have some left over, yes. If they live beyond their means, they either cannot or will not save. Some seniors do live beyond their means and watch their nest eggs vanish.

Some seniors have avoided using plastic (credit and debit cards) while others get a little over rambunctious, maxing out their cards. Some even sign-up with those omnipresent credit card applications that arrive unsolicited in the mail. One elderly couple did this, ran up a credit card debt of $80,000 and were forced to file for bankruptcy. It now is being said that people over 55 account for over 20% of all bankruptcies.

What else could cause senior bankruptcy? Chronic illnesses that drain the budget. The rising costs of medical attention and medicines. Inflation. Inadequate savings accounts and over-dependency on Medicare and pensions. Some count on home values to continually increase while some are misled into refinancing schemes. Then there is often the burning desire to leave an inheritance, often for family members who don't need it (or deserve it). Fortunately, some do not want their parents/grandparents to sacrifice in order to make it happen.

Grandchildren and great-grandchildren do increase in numbers which helps deplete meager resources. Rather than reduce the number and value of these gifts at birthdays, anniversaries, holidays and graduations, seniors flirt with bankruptcy ironically by being overly generous.

Finally, seniors intensify all this by embarrassment, delaying or refusing to ask for help. Adult children, often aging themselves, do not always meddle in their parents affairs and may find out about this predicament the hard way. Certain offspring are unable or unwilling to bail them out. Unfortunately, debt does occur and can happen in the best of families. So, be careful, OK?