Bankruptcy Filings Among Older Americans Surge
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What is the main topic discussed in this episode?
I'm J.R. Whelan in New York. More and more older Americans are finding their financial future is so bleak, they're taking a drastic last resort action. We'll explain in a moment. First, these money headlines. A report from the global research and advisory firm Gartner suggests the elimination of middle managers across many U.S. companies could be contributing to the sluggish growth of wages. The firm says as middle positions go away, there is less opportunity for promotion and in turn wage growth.
What is driving the surge in bankruptcy filings among Americans 65 and older?
While average hourly pay increased 7 cents to $25.07 in July, the 12-month wage growth rate stayed the same at 2.7 percent, and that's weaker than many economists had expected. Lower prices for beef, pork, and chicken make for good planning for the dinner table, but they're cutting into profits for the biggest U.S. meat processing companies. Meat prices have been coming down for retailers, restaurants, and food distributors. A July report from the USDA pointed out that wholesale beef prices declined 9%. At the same time, chicken prices for most of 2018 were down. were running above last year's levels but then dropped off in July. In grocery store meat cases, relatively lower prices are helping sausages and ground beef push aside chicken breasts.
How much have senior bankruptcy rates increased since 1991 and which age groups are most affected?
And in some cases, that's meant cheaper burgers and bratwurst for U.S. consumers' summer cookouts. This is your Money Briefing from The Wall Street Journal. Welcome back, everybody. There's a disturbing trend among senior citizens today and their financial health. And Wall Street Journal reporter Ann Turgason is here with details. So, Ann, the bankruptcy filings among seniors has risen at an alarming rate.
Yeah, since 1991, according to a new study that came out this weekend, the rate of bankruptcy filings among people 65 and older has more than tripled since 1991. Specifically, they found also that of people who file for bankruptcy, about 12% of that bankrupt population are now ages 65 to 74. In comparison, in 1991, it was 2.1%. So you can see that older people now comprise a larger fraction of those who declare bankruptcy.
Yeah, it's a significant increase. And it has a lot to do with companies trending away from pensions.
Well, that's according to the study's authors. They say that the decline in the security network or safety net for people is really to blame, including the trend away from pensions to 401ks. They also look at cutbacks and effectively what have been cutbacks in Social Security policies. There is some dispute about that that I've been noticing on Twitter among economists as to whether the shift to 401ks is to blame. And I suspect that part of the rationale may be that while everybody looks to pensions as some kind of, you know, wonderful thing, the reality is that, you know, 100% of the population was never covered by pensions. In fact, the coverage was, you know, was pretty spotty.
And some of those safety nets you mentioned are 401k accounts. I guess also Medicare goes into that category?
So both Social Security and Medicare. And the age at which you can claim full Social Security benefits has been rising for people born between 1938 and 1960. That age of claiming full benefits has risen from 65 to 67. So I mean, there's no question that there have been cutbacks in Social Security in particular. The other issue with regard to Medicare is that it doesn't cover 100%. And people who assume that when they retire, oh, I'll be on Medicare, everything will be taken care of, that's actually really not true at all because you have to pay your monthly premiums, which are $134 for Part B. And Medicare, I think, on average covers about 80% of costs. So you've got to cover the remaining 20%.
Are declines in pensions and shifts to 401(k)s blamed for seniors' financial distress?
And there isn't much bright light on the horizon as the population ages. As you pointed out in your story, the problem isn't expected to go away.
Well, that's what the study's authors are saying. Based on their analysis, based on their data, they're projecting that as the population continues to age, that the problems that older people seem to be experiencing, which also include higher levels of debt, the level of debt taken on by older Americans has increased dramatically.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–0:35
2
What is driving the surge in bankruptcy filings among Americans 65 and older?
0:35–1:20
3
How much have senior bankruptcy rates increased since 1991 and which age groups are most affected?
1:20–3:58
4
Are declines in pensions and shifts to 401(k)s blamed for seniors' financial distress?
3:58–5:11
5
How have changes to Social Security and Medicare contributed to older Americans' financial strain?
5:11–6:12
Speakers
2 identifiedMore from WSJ Your Money Briefing
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