More middle-age and older people on financially shaky ground

Sue Daugherty
Mar 23, 2010

 

I remember when I was going to night school in 1998 to earn my graduate certificate in gerontology the professors were teaching students that, "Today's senior citizen population is the wealthiest and the healthiest older population our country has ever seen." (The professors were referring to those senior citizens who were born between 1923 - 1933.)

Then they would go on to say, "Those who stand to benefit from this earned wealth are the middle-age children of these senior citizens. As they will be the ones who will inherit it." The professors were referring to the baby boomer generation.

I find this interesting, because what I was taught in 1998 is contrary to the recent AARP's Public Policy Institute Research Report, entitled "Generations of Struggle." This study points out the shaky financial ground that the 55 and older population is on.

The size of the baby boomer generation alone makes it worth studying. It's size is the cause of some of the social and economic events that are taking place in our American society today.

With that in mind, the AARP sponsored research that studied the occurrence of bankruptcy filings since 1991, and it focused its analysis on those filers who were age 55 and older.

Here are some interesting trends it cited:

* Individuals, of all ages, today are emotionally worried about their acquired debt.

* Over one million people (of all ages) filed for bankruptcy last year.

* Since 1991 the rate of bankruptcy filings doubled for the age 65 and older population group.

* The bankruptcy population has aged faster than the general U.S. population.

* In 1991 only 8.2% of the debtors were age 55 or older. By 2007, that percentage of 55 and older debtors rose to 22.3%. Even with the more stringent bankruptcy law changes in 2005, the 55 and older population were filing for bankruptcy at a higher rate in 2007 than they filed in 1991.

Is the increase in bankruptcy occurring among the 55 and older population because:

* Boomers outspent their "anticipated" inheritance in the form of credit card spending and equity loans?

* Did parents of boomers go broke due to health care expenses that ate up the financial legacy that was intended for their middle aged children?

* Are late middle-age and older-age people living beyond their means?

Just as important as finding an answer to those questions listed above, is answering the following questions:

* What is it going to take to restore financial literacy back into the fabric of our American society? And who should lead this charge? Does anyone care?

Comments

Anonymous

The overall level of financial ignorance in the richest country in the world is pathetic.

It is unfortunately almost too late for most boomers, but the U.S. continues to spawn financial illiterates. Such ignorance will potentially leave our country in a decidedly disadvantageous economic position in a world racing toward globalization.

A small start - A minimum of one class in personal finance should be mandatory for high school graduation.

On the consumer side of the equation: Sad to say, but items and services that would have been considered luxuries in a previous age, are quite often today looked upon as necessities.

Whenever our county’s Gross Domestic Product (GDP) numbers are reported, it is usually pointed out that approx. 70-80 percent of that figure is due to consumer spending.

In other words, if people cut back on spending, our economy suffers. Coincidentally then, if people were to begin to save more money for their retirement, our economy likewise suffers.

What a strange state of affairs our government’s tax policies have created, where spending is rewarded and thrift penalized.

Gulliver

I agree that high school should teach one class on personal finance... actually it should be taught each of the 4 years in high school.

But what about the people who are 20-something, 30, 40, 50? What's out there to teach them?

An even more intriguing question is... Do any of these 20, 30, 40, 50 year olds care about learning how to manage money?

Anonymous

Gulliver: 'But what about the people who are 20-something, 30, 40, 50? What's out there to teach them?'

Good question. IMO, it's called self-education.

Without the details, several yrs. ago, I purchased and read good primers like the ‘Dummies’ books on mutual funds and investing. There is also one on personal finance.

Heck! Just one idea I gleaned from the mutual fund book has paid for the price of the book hundreds of times over.

I must admit, reading the stuff can often times be boring. But I forced myself to read a minimum of four pages a day. On some days the reading was easy, some difficult.

I’ve often told people that if they just read the ‘Mutual Funds for Dummies’ book, they will IMO know more about investing than 95% of the population.

The majority of people who are enrolled in their company’s 401(k) plan, may put money in, but they have no idea what they are doing regarding asset allocation, etc.

After I got the basics, I went on to read more complex and difficult books.

IMO, an excellent site for book lists is: http://www.bobbrinker.com/books.asp

And another important point is to ‘shark proof’ oneself. There are scam artists galore out there. IMO, some are ‘legitimate’ like those who charge unnecessarily high fees and commissions, and some are just outright crooks.

IMO, it’s OK to use a financial planner, just make sure that they pass the smell test. If one is educated, it becomes a bit easier to separate the goats from the lambs.

For one - there are tons of very expensive annuities being sold to a lot of people for the wrong reasons.

Anonymous

Gulliver: ‘Do any of these 20, 30, 40, 50 year olds care about learning how to manage money?’

As a proud graduate of the school of self-responsibility, with a post-graduate degree from Concrete U., that is a very difficult question for me to answer.

Anonymous

after reading the comments I think the majority who took the register on voting should do a little more research on who to vote for,do we want more of what we have today or a chance for more economic stability,our dollar is at its lowest since right after WWII.

Anonymous

samantha:

And you would like the politicos to create economic stability how?

Anonymous

My parents saying regardless what you do in life NEVER live paycheck to paycheck. How wise! My father never finished high school yet he kept buying more farm ground. Then in the eighties when Doctors & other so called educated people hungered to live in the country he sold them ground on his terms. He lived life his way. He bought low when the economy went bad & re-sold later when it got better. Economics 101.

Contango

Are you also Jeff?

Anonymous

Following up on the posting of ‘I remember’ – live below your means and save the balance.

One great read that I enjoyed and which helped to solidify my thinking regarding asset accumulation was, 'The Millionaire Next Door.'

The ‘rich’ is this country are not who most people think they are. Those that ‘got it,’ generally don’t flaunt it.

And those who do flaunt it, are more often than not, living beyond their means and are stone cold broke.

Also, it’s important to know the difference between an ‘asset’ and a ‘liability.’ Confusion between the two is the cause of much poverty.

‘Rich Dad, Poor Dad,’ is an easy-to-read book that lays out the difference very clearly.

Anonymous

We know.

Anonymous

You can't depend on your paycheck. You must look within & do for loved ones & yourself. Your government will let you down. So will your pastor.Life is about so many things the 1rst being honest with yourself.

Anonymous

Donnie Iris! Thanks. I haven't thought of the guy in yrs. probably since listening to him last century on WMMS.

Like Huey Lewis - good danceable pop tunes.

Anonymous

Yes! (Concrete man I thought you were older). Now don't delete again. (Leah)

Anonymous

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Anonymous

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