Why are so many people over 55 going bankrupt? (pensions, conversation, screaming)
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The only ways to go bankrupt with medical bills at any age are:
1. having a health insurance policy with a cap (ie, the maximum coverage beyond which the insurance will not pay), or
2. getting medical care out of the insurance network.
The ways to go bankrupt with medical bills after 65 and on Medicare are:
1. not having a Medicare supplement with unlimited coverage (Medicare does have a cap), or
2. getting medical care from a place that does not accept Medicare (uncommon), or
3. going to a nursing home (covered by Medicare for 100 days only) - though this usually does not lead to bankruptcy but simply gradual exhaustion of all assets (after which one qualifies for Medicaid).
I am a 59 year old healthcare professional who knows a fair bit about medicine. The only major acute->chronic medical problem for which I would seek aggressive treatment is stroke. I will not do anything about heart disease or cancer should I get one and/or the other, except for palliative care and pain relief at the end. I have arrangements outside the US for an inexpensive nursing home should I need it. The only other expensive medical thing I could conceivably need would be acute management of trauma outside of my regular health insurance network (eg, being hit by a car), for which I have an annual travel insurance (I travel a lot). When I get on Medicare, I will purchase a supplement without cap. That is all I can think of on that subject...
My hub was the only one working in 2009 when he had tonsil cancer. He was out 7 months. Even with great insurance, he still owed the cancer center about $70,000. Our health insurance went to cobra, so we also had that to pay plus our mortgage and property taxes. Thankfully I was diligent with every cent that went out, I got all the receipts together and filed for charity care, not knowing if we'd qualify but thankfully we did. I spent my savings paying stuff we needed plus some of his meds weren't covered. I'm not going to tell him that we couldn't afford the only nausea medicine that worked for that type of chemo. He suffered enough with radiation burns, peg tube problems and thrush. We stayed in network with treatment. He was 52 when he got cancer. Way too young to not get treated. He's been cancer free 10 years this December.
He had a great job that ended up filing bankruptcy and closing in 2011. He had to put our car carrier in the shop and take a company drivers job while the truck got refurbed. Since he was out of work 7 months, he didn't qualify for a huge loan, he put it on credit. Paid a lot of it off but still struggled with that credit card debt. He's with another employer where he can't make money to pay everything, especially health insurance for himself. I have medicare. He finally decided to take some of that debt and filed. Hopefully it will be enough so we can try to save some money for retirement now that he's 62. He can't do the car carrier job much longer.
Quote:
Originally Posted by Ulysses61
Because they don't manage their money. Because they insist on having children they can't afford to have and then foolishly mortgage their lives to put them all through college.
Most people I know retired at 55, as did I. We invested early and wisely, had no children and put away 35% of our monthly checks for 30 years. It's called discipline.
Not everyone that filed bankruptcy was foolish with their money. Be glad you didn't have a major illness like cancer. I'm also disabled. Plus my hub lost his great job. The money just isn't there these days. We've cut as much fat as we could, years ago. Even with the great prescription insurance I have, I end up in the donut hole in March until August. My under $100 copay goes to $300. I have a lot of medication allergies and can only take so many meds. I do have great health insurance, Medicare and a medigap BCBS. My hub is dealing with a new back issue with his crappy Obama care insurance. Injections cost him close to $2,000 I think he said.
Our kids are adults. None of them went to college.
Don't forget that with governmental support for gambling now, there is a casino, bingo hall, gaming establishment, or lottery sales outlet on every corner, all of which tends to prey on the uneducated or easily-addicted. Also, throw in the relatively easy access to drugs, both legal and illegal, which are addictive and expensive. Plus the 24/7 bombardment on our senses from Madison Avenue, telling us that we "need" all kinds of stuff that we do not really need, and that we are effectively "losers" without it. A constant stream of Weight Watchers and Jenny Craig ads on one channel, and Golden Corral / Dairy Queen ads on the other. Big Data plays the Average Joe like a friggin' fiddle today.
Finally, Bankruptcy is seen as "no big deal" today, where in the past it was socially stigmatized. Commercials for legal firms selling bankruptcy play almost non-stop, and blame "predatory lending" for people borrowing too much. And of course, predatory lending is a "real thing", double digit interest rates on credit cards, auto title loans, used cars, etc. put and keep many folks in debt.
Frankly with so many folks out there with low impulse control, the inability to defer gratification and little fiscal intelligence, coupled with predatory sales and marketing techniques, coupled with the easy access to the courts to discharge debt, and I'm amazed that the bankruptcy rate is as low as it is.
Lack of planning. By 55 you should be pretty much debt free. House paid off or almost, no other debts that aren't paid monthly. If you don't plan, then losing your job at 55 will be a big hardship. Try and find a comparable job at that age when every company is downsizing older and more costly employees. If you are debt free you can get by with a job that is just a job, paying little but enough to pay monthly bills. When people get in the situation where they are living paycheck to paycheck and spending all or more life happens and you end up in trouble. Can't afford that phone service and cable package? Downgrade the phone service to a phone for just making and receiving calls and texts (Tracfone for instance) get rid of the tv portion of your package and go free tv over the internet and antenna. Reduce extraneous spending. Many people, however, fail in this and continue to spend and rack up debt so when they have an illness they can't pay because they failed to get insurance or proper supplemental insurance in a failed attempt to save on the wrong things. So basically, blaming it on medical costs is just an outcome, not the cause. The cause was lack of planning from earlier in their life. The so called donut hole should never bankrupt you if you planned accordingly. Don't go for the cheapest plan when you can't afford the risks. The amount of insurance you take is dependent on the risk you can afford not on what you want to spend on that insurance.
Hey, stop making sense Buddy!
It's much easier to blame forces outside yourself than actually admitting you f---ed up.
If it came to declaring bankruptcy or selling my home, vehicles and belongings, moving to a tiny apartment in a low COL state, living with a pay as you go burner phone, no TV, hitting the food banks, eating beans and rice, shopping in thrift stores, turning the heat down to 60 and wearing sweats all the time, riding the bus to work, working a second job, taking in other people's kids to babysit, I would do all that before I'd declare bankruptcy. I wouldn't necessarily like it, but that's why I pay for all kinds of insurance and never buy anything on credit that I can't pay off in very short order. I don't believe in sticking other people with the bill for what I've consumed, medical or otherwise. I have lived on next to nothing at times (my pay at the time=rent+$200), and I have lived a pretty awesome, high consuming lifestyle too, and I know when it's time to switch gears and go into extreme budget mode. 90% of what we think we can't live without is just BS. And most bankruptcies and foreclosures come from people trying to hang on to what they've got when they no longer have the income to support it. There's no sin in downsizing one's lifestyle to cover their debts, and the sooner you read the handwriting on the wall and get with the program, the less likely you'll ever have to go the bankruptcy route.
Last edited by TheShadow; 11-05-2019 at 02:54 PM..
It's not QUITE as bad as it sounds. According to the CPI calculator, $400 in 1970 = $2700 in 2019. So, still an increase, but not by all that much.
That's still a big bite, whether it's $2700, $3400 or $2m.
I was medically early retired at age 40. In the 16 years since, my medicare supplemental has drastically gone up alone, 10% this next year alone, and 8% last year for thisyear. My SSDI went up, what a 3% was it this year, and big 1.6% this year, so what, 4.6% compared to 18%?
Its no wonder people forgo something like a supplemental and accumulate added medical debt, and their only way out may BE bk.
Not to mention that Wally worlds soup, for example, went from just $0.50 to $0.76. a hefty 50% increase from one week to the next. I looked and SHOULD have bought to stock up, and would have if I had known it was going up 50% the very next week!!!
Even bread has gone from $0.89 to $0.99 at Aldi, and salad mix a year ago was $0.69, now $1.19 a year later.
So with other costs rising, and drastic medical insurance costs, it's no wonder people go for bankruptcy, they can't afford NOT to.
Because they don't manage their money. Because they insist on having children they can't afford to have and then foolishly mortgage their lives to put them all through college.
Most people I know retired at 55, as did I. We invested early and wisely, had no children and put away 35% of our monthly checks for 30 years. It's called discipline.
I love these posts, as if saving 35% of your income is possible for everyone with just a little "discipline".
My hub was the only one working in 2009 when he had tonsil cancer. He was out 7 months. Even with great insurance, he still owed the cancer center about $70,000.
I never understood this. Every insurance I have ever had came with a max out of pocket figure but it sure wasn't $70,000
I love these posts, as if saving 35% of your income is possible for everyone with just a little "discipline".
It sure is!
My dad taught us (he was an MD that graduated from Dartmouth) a few things very early in life and made us WORK for what we wanted in High School (cars etc..):
1. Save 10% (or more) of your income every year when you start working- NO MATTER WHAT.
2. Never finance depreciating assets (cars, boats etc..)
3. Buy a quality late model car a couple of years old for CASH- drive it for 10 years and do it all over again.
4. Buy quality dividend paying stocks and keep them forever. When the market crashes use your savings to buy MORE of those same stocks when the idiots are selling.
5. Watch your re-invested dividends and compounding interest really take off later in life.
At 55 my house has been paid off for 8 years and I have about 2 mil. in assets- not too hard to do!
The only ways to go bankrupt with medical bills at any age are:
1. having a health insurance policy with a cap (ie, the maximum coverage beyond which the insurance will not pay), or
2. getting medical care out of the insurance network.
The ways to go bankrupt with medical bills after 65 and on Medicare are:
1. not having a Medicare supplement with unlimited coverage (Medicare does have a cap), or
2. getting medical care from a place that does not accept Medicare (uncommon), or
3. going to a nursing home (covered by Medicare for 100 days only) - though this usually does not lead to bankruptcy but simply gradual exhaustion of all assets (after which one qualifies for Medicaid).
I am a 59 year old healthcare professional who knows a fair bit about medicine. The only major acute->chronic medical problem for which I would seek aggressive treatment is stroke. I will not do anything about heart disease or cancer should I get one and/or the other, except for palliative care and pain relief at the end. I have arrangements outside the US for an inexpensive nursing home should I need it. The only other expensive medical thing I could conceivably need would be acute management of trauma outside of my regular health insurance network (eg, being hit by a car), for which I have an annual travel insurance (I travel a lot). When I get on Medicare, I will purchase a supplement without cap. That is all I can think of on that subject...
People here can get into financial strife when they have what is usually a terminal illness and they exhaust what is available here. They then go and seek alternative treatments overseas at high costs, which are almost always not successful.
I suppose that if someone got hooked on purely cosmetic surgery, which is not covered by our system, they could also create problems. But I have never heard of anyone I know doing that.
The worst thing about the bankruptcy system here is that it is taken advantage of for people to avoid business debts. Builders are notorious for declaring themselves bankrupt while their assets are in their partner's names. They then continue to live in their waterfront mansion and live it up overseas while avoiding their responsibilities.
My dad taught us (he was an MD that graduated from Dartmouth) a few things very early in life and made us WORK for what we wanted in High School (cars etc..):
1. Save 10% (or more) of your income every year when you start working- NO MATTER WHAT.
2. Never finance depreciating assets (cars, boats etc..)
3. Buy a quality late model car a couple of years old for CASH- drive it for 10 years and do it all over again.
4. Buy quality dividend paying stocks and keep them forever. When the market crashes use your savings to buy MORE of those same stocks when the idiots are selling.
5. Watch your re-invested dividends and compounding interest really take off later in life.
At 55 my house has been paid off for 8 years and I have about 2 mil. in assets- not too hard to do!
You said 10%. The poster I quoted said 35%. Where I went to school 35%>10%.
In our case we did basically everything on your list only our house was paid off at age 57 (I believe). That does not mean we could save 35% of our income, very very few can.
My dad taught us (he was an MD that graduated from Dartmouth) a few things very early in life and made us WORK for what we wanted in High School (cars etc..):
1. Save 10% (or more) of your income every year when you start working- NO MATTER WHAT.
2. Never finance depreciating assets (cars, boats etc..)
3. Buy a quality late model car a couple of years old for CASH- drive it for 10 years and do it all over again.
4. Buy quality dividend paying stocks and keep them forever. When the market crashes use your savings to buy MORE of those same stocks when the idiots are selling.
5. Watch your re-invested dividends and compounding interest really take off later in life.
At 55 my house has been paid off for 8 years and I have about 2 mil. in assets- not too hard to do!
My parents taught us NOTHING. Everything I learned about personal finance coming up was taught in 9th grade -- how to write a check. Nothing about budgeting, saving, 401k, retirement, or life insurance.
As kids, we were expected (and prepped) to go to work, not college. Having grown up without a lot of extras, once I turned 18 and credit card applications magically began showing up in my mailbox, I thought I'd hit the lottery. I knew nothing about FICO scores, credit utilization (you mean I have a $2500 limit, but I can't USE it all???), high interest rates, etc. I learned all of that the hard way and spent the better part of 10-15 years digging my way out of those poor decisions.
Should I have taken it upon myself at 18yo to learn the nuances of personal finance? YES.
Did I? NO.
Are there others like me out there? YES.
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