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Seniors face historic credit card highs

Historians have long said that empathy can lead to a slew of bad decisions. Some modern scholars would say that our current economy reflects this bleeding-heart plight, especially when considering people who are seeking debt relief. After all, we should not have much sympathy for people who worked themselves into debt because of their frivolous spending, according to many pundits.

Still, even the most critical financial analyst would find it hard to turn away from an increasing problem among senior citizens who are mired in debt thanks to years of financial hardship. New data from the AARP suggests that the number of senior citizens with serious money issues is on the rise. In 2011 alone, more than one-fourth of all bankruptcies were filed by people over 55. Senior bankruptcies increased by more than 130 percent in the five-year span between 2006 and 2011, according to analysts, signaling a fundamental financial problem that could ultimately end up affecting us all.

When people in their 20s, 30s and 40s encounter financial hardship, they are generally able to rebound. They have decades, in fact, to continue saving and recovering from bankruptcies declared even later in life. People older than 50, on the other hand, tend to struggle to regain financial footing after a significant loss, largely because their earning potential and number of employable years have dropped significantly.

Government estimates are similarly bleak. At least 63 percent of older Americans are in debt, and their average amount owed has reached a staggering sum - more than $70,000. This comes at a time when nearly half of all Americans die with assets lower than $10,000. Most seniors attribute their financial problems to credit card debt and interest. Most older Americans also face significant medical debt because of their advanced age, and more than one-fourth have gone into debt to buy food or groceries.

As the bankruptcy landscape in our nation changes, it will be important to consider the unique needs of an older population facing increasing financial vulnerability.

Source: The Street, "Shocking rise in problem credit card debt among seniors," Dec. 12, 2012

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