Americans age 65 and older are faced with a perfect storm of issues:
- Reduced income. Remember, the average Social Security check is $1,661 per month, not enough to pay the bills in most of the US.
- Delayed full retirement age: for some of us it;s 66, for most 67 and Congress may delay it further.
- Higher our of pocket costs under Medicare, and the GOP wants to curtain benefits further.
- Mortgages that extend into retirement, especially if there’s been a renegotiation.
- Disappearing pensions.
- 401k losses.
Now, we are seeing a 204% increase in the rate of bankruptcies among seniors.
Basically, to survive life after 65, you need at a bare minimum around $250,000 in cash or liquid investments. For what used to be a “middle class lifestyle,” triple that. However, most Americans have maybe 10% of the bare minimum. Simply, that’s not enough.
So the “social safety net” now includes bankruptcy.
Now if you think this only affects seniors, think about a increase in the supply of foreclosed homes just when demand is declining. Think underwater mortgages, and declines in housing prices — including yours. This is potential trouble for mortgage companies and especially for those in the reverse mortgage business.
Here we go again.
Sources:
- Deborah Thorne et. al. “The Graying of US Bankruptcy: Fallout from Life in a Risk Society,” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3226574
- https://www.nytimes.com/2018/08/05/business/bankruptcy-older-americans.html?nl=top-stories&nlid=57250219ries&ref=cta
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