Glenn Beck once famously blamed Nazi genocide on empathy. He based this view on the fact that Hitler's propaganda machine once claimed that murdering those with physical disabilities and/or learning difficulties was the empathetic thing to do. His conclusion? "Empathy leads you to many bad decisions." Beck's opinion is one that seems to be shared by a whole lot of Americans when considering the plight of those of their fellow citizens who are in debt. But perhaps many in arrears or default don't deserve much sympathy or empathy. They threw away money they didn't have, buying things they didn't need, in pursuit of a happiness they didn't achieve. True, our economy is largely based on consumer credit, and would probably collapse if people only bought what they had to have. And a whole industry exists that has the sole aim of persuading people that purchasing the unnecessary or the unnecessarily expensive is going to make them happy. But this country's ethos of personal responsibility is deeply ingrained and a cause of much of its success, and it's neither possible nor desirable to be rid of it.
Bankruptcy and seniorsHowever, even the most hard-hearted and judgmental of observers must surely be moved by the prospect of unmanageable debt among one particular group: seniors. When people in their 20s, 30s, and 40s get themselves into financial trouble, they generally have plenty of opportunities to get back on track. By the time they're in their late 50s or older, those opportunities have dwindled away, often almost to nothing. Trouble is, the number of seniors with serious money problems is large and growing. The AARP quotes on its website data compiled by the Institute for Financial Literacy: In 2011, 25.3 percent of all personal bankruptcy filings were made by those 55 years and over, up from 21.8 percent in 2006. That growing proportion is bad enough, but it's made worse by the fact that the total number of those bankruptcies was up 134 percent over the same period, rising to 1.4 million from fewer than 600,000. In other words, more than 350,000 seniors went bust in 2011.
Problem getting worseOf course, for most, bankruptcy is the very last resort; it's the hungry polar bear sitting on the tip of the iceberg. Earlier this year, The Baltimore Sun cited an Employee Benefits Research Institute analysis of government figures. This showed that, between 1992 and 2007, the proportion of indebted individuals of 55 years or older leaped to 63 percent, up from 53.8 percent. And the average amount these people owed more than doubled in that time to $70,370. Meanwhile, earlier this year, the National Bureau of Economic Research reported that nearly half (46.1 percent) of Americans die with assets of less than $10,000.
And the prospect of things getting better seems remote. On Dec. 3, 2012, Capital One published research that suggests that more than a third of Americans are currently not saving for their retirements.
Credit card debt the biggest contributory factorFor his 2010 study, The Rise in Elder Bankruptcy Filings and Failure of U.S. Bankruptcy Law, Professor John A. E. Pottow of the University of Michigan Law School asked thousands of people who'd filed for bankruptcy about their experiences. More seniors (two-thirds of them) identified credit card debt -- or, rather, the fees and interest on their credit card debt -- as a contributing factor to their problems than any other cause. Furthermore, those seniors identified it more frequently than those in younger age groups. They also owed more. Based on his findings, Prof. Pottow calculated that, in 2007, those filers 65 and over likely owed on average $27,213 in credit card debt, while the same figure for those under 65 was $15,499.
Causes of seniors' debtOf course, plenty of seniors have only themselves to blame for their debt. In November 2010, CESI Debt Solutions, a national nonprofit, published the results of a small-scale nationwide survey that asked retirees about what first got them into financial trouble. A significant number acknowledged factors such as leisure activities, entertainment and travel. But many more had less frivolous reasons:
- 53 percent, by far the largest group, cited medical expenses. Buying medication/filling prescriptions was especially important.
- 28 percent said they first went into debt to buy food or groceries.
- 26 percent had to borrow initially to cover funeral costs.