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With the economy hitting on all cylinders, many observers would agree that the rising sea has lifted all boats. As Gomer Pyle used to say, “Surprise, surprise, surprise” according to new research more aging Americans are filing for bankruptcy than ever before.

The findings from Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society, based on data from the Consumer Bankruptcy Project (CBP) revealed that the number of people filing for bankruptcy ages 65 through 74 doubled between 1991 and 2016, but the number of filers 75 and up tripled.

The report found, “In our data, older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of health care, as they try to deal with reductions to their social safety net.”

The mantra too many Americans repeat is something like, ‘Cash or credit, spend, baby spend!’ The problem is compounded over the years when pensions become history, skyrocketing medical costs, and inadequate savings. Over the past three decades, the study suggests the responsibility has shifted from government and employers to individuals who are completely on their own.

An analysis by the Employee Benefit Research Institute found that retirees today are carrying more debt into their retirement years than members of previous generations. Many retirees carry more mortgage debt than those before them. According to an Urban Institute report, “Roughly 41 percent in 2016, compared with 21 percent in 1989,” hold a mortgage.

The New York Times, August 8, 2018, spoke to Seattle bankruptcy attorney, Marc Stern who says that more than one-third of aging people filing for bankruptcy let loved ones contribute to their problems. Some parents had co-signed loans for children for $10,000 or $20,000, but no longer had the resources to keep loan payments current. “When you are living on $2,000 a month and that includes Social Security, and you have rent and savings are minuscule, it is extremely difficult to recover from something like that,” said Stern. He went on to cite examples of parents who were still responsible for their children’s student loans of $100,000 “that are difficult if not impossible to pay or discharge in bankruptcy, and these are the kids’ loans,” Stern revealed.

The CBP found that “The median household led by someone 65 or older had liquid savings of $60,600 in 2016, according to the Employee Benefit Research Institute, whereas the bottom 25 percent of a household had saved at most $3,260.”

It’s never too late and you aren’t too old to put your personal financial plan in place.  According to Forbes Laura Shin, here are 10 Reasons Why Financial Plans Aren’t Just for the 1%.

  1. It will help you define your financial goals.
  2. It will help you see whether your goals are realistic, especially for your timeline.
  3. It will help you see how you can bring your spending in line with your goals. 
  4. It will show you what money mistakes you’re currently making.
  5. It will allow you to measure your progress on your goals.
  6. It will help you find new ways to maximize your money.
  7. It will help you identify risks you hadn’t thought of.
  8. It will make you more confident with your money. 
  9. It will help you build wealth. 
  10. It will help you live more comfortably. 

Source: CFP Board

According to the CFP Board survey, May 20, 2012, 52% of those with a plan feel “very confident” about managing money, savings and investments, while just 30% of those without do.

No matter how the winds might blow and the seas may churn, when you’re the captain of your ship, you are in charge of putting your plan in place so that you, your guests, and your crew arrive at your desired destination on time and safely. To avoid waking up to “too little, too late” let me encourage you to create your financial plan now so you can see the big picture as you set your long and short-term life goals. Money may not be the only thing, but it touches everything. It’s like going on vacation. When you know you have enough money you can better enjoy yourselves and your company.

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