A recent study found people aged 65 and older are filing for bankruptcy at three times the rate as they were in 1991. The New York Times states of the people from ages 65 to 74, 3.6 out of 1000 file for bankruptcy. The study suggests this increase is due to changes like moving from pensions to 401(k)s, more spending on health care and having to wait for full Social Security benefits.
Health care costs sited as an issue
The study engaged a group of bankruptcy filers from ages 19 to 92 and asked them what contributed to their filing for bankruptcy. Usually, the study respondents cited multiple reasons for the need to enter bankruptcy protection. For those 65 and older, three-fifths cited overwhelming medical costs as a contributing factor.
Many will need long-term care
It is likely more than just hospital visits are causing seniors to struggle with medical costs. For many older Americans, long-term care will become a need. According to the U.S. Department of Health & Human Services, 70 percent of those over 65 will need long-term care as they age. Of those that need care, 20 percent will need care that lasts longer than five years.
Long-term care costs can be a burden
As these bankruptcies finding suggest, this care can be costly. A private room in a nursing home costs an average of $7,698 a month, which adds up to $92,376 a year. Medicare and Medicaid may only pay for a portion of the costs, or you may need to be under a certain income requirement to receive assistance.
To prepare for these costs, you may consider including long-term care plans in your estate plans. Meeting with an attorney that specializes in estate planning will allow you and your family to discuss all the possible situations and decide what is best for your future. By planning for the possibility of long-term care, you are protecting yourself and your family from having to make tough financial decisions, like potentially filing for bankruptcy.