The number of baby boomers filing for bankruptcy is increasing every year. Researchers have been tracking the trend since the mid nineteen nineties. In the past few years alone, between a third and a half of all bankruptcies filed have belonged to people in the baby boomer age group.
The situation is particularly depressing for this group of consumers as they are either near retirement or already in retirement. So, instead of enjoying their retirement years taking pleasure vacations, they find themselves having to go back to work again to pay back debts they have racked up over the years.
Why should this group be affected more than most other groups of consumers? There are a number of reasons, but three stand out. One is that many of the ones who did have savings had their investments in the stock market. Many of these have seen their net worth decrease significantly as they took continuous losses.
Secondly, due to the bad economy, many of the baby boomers have been unexpectedly laid off in recent years. This has caused many of them to have to find other sources of income. Many that were not able to had dip into their savings. And when the savings ran out, they found them stacking up credit card debts.
The third reason is that real estate has taken a significant hit over the last decade. Homeowners have seen their equity in their homes decrease. Some of the home investments have taken such a hit that they now have negative home equity. People in young age groups can generally get by finding other part time jobs to help them bring in more money. Because of their age, baby boomers, as a group, find it harder to replace lost income. Primarily falling into the age group of 55 and older, they find it much harder to find employment than their younger counterparts. As a result, they find it harder to replace lost income and are driven to take out loans instead.
The long periods of not being employed has also caused many of them to go without health insurance. And, catastrophic illnesses has drained what little resources many of them had. The combination of all of these factors can drain what financial resources that are available to them.
Having exhausted all other resources to get back into solvency, bankruptcy is probably the last refuge where people can turn to get debt relief. And, reluctantly, many baby boomers have begun to use that refugee.