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More American seniors are facing financial insolvency

When one thinks of their "golden years," it's doubtful that they are considering the prospect of looming bankruptcy. However, for many Americans of retirement age, it's a real possibility, since the rates of bankruptcy among senior citizens have increased to five times the rate since 1991.

The increase in senior citizens filing for bankruptcy greatly exceeds the demographic shift. Researchers with the Consumer Bankruptcy Project analyzed data from bankruptcy filings and questionnaires. They found that more than 12 percent of the bankruptcy filings each year in the United States come from senior citizens.

Higher retirement ages and increasing out-of-pocket health care expenses have contributed to senior citizens' financial insecurities. Another factor is the transfer of risk from state and federal governments and corporations onto the individuals.

Today, Americans are less likely today to retire with private pensions, as 401(k)s have become the popular choice for workers' savings and investment options. Senior citizens are far likelier to carry credit card and mortgage debts into their golden years when compared with their counterparts in the past.

Then, too, the age at which seniors can claim their full retirement benefits have steadily been inching northward. Retirees are now spending 20 percent of their incomes on health care costs. This holds out even though today's senior citizens have Medicare coverage, in contrast with only 12 percent of previous generations.

The report for the project also notes that "[f]or an increasing number of older Americans, their golden years are fraught with economic risks, the result of which is often bankruptcy."

It's not likely to improve. It's predicted that by 2050, a quarter of the population will be 66 years of age or older and our country will struggle to deal with the "coming storm of broke elderly."

If these warnings strike a chord with your own finances, it's not too late to position yourself better financially. Filing for bankruptcy now can wipe out most of your debt load and allow you to change the course of your financial trajectory.

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