Ours is a Sick, Failed Society

The whole reason one reads newspapers can be found in a story by Tara Siegel Bernard, "‘Too Little Too Late’: Bankruptcy Booms Among Older Americans," which appeared in yesterday's national edition. Ours is a failed society. We are often told that our politics are skewed to the elderly, who receive the lion's share of the benefits. But Siegel Bernard makes clear that even Medicare and Social Security are not enough to protect a growing number of senior citizens:

For a rapidly growing share of older Americans, traditional ideas about life in retirement are being upended by a dismal reality: bankruptcy.

The signs of potential trouble — vanishing pensions, soaring medical expenses, inadequate savings — have been building for years. Now, new research sheds light on the scope of the problem: The rate of people 65 and older filing for bankruptcy is three times what it was in 1991, the study found, and the same group accounts for a far greater share of all filers.

Driving the surge, the study suggests, is a three-decade shift of financial risk from government and employers to individuals, who are bearing an ever-greater responsibility for their own financial well-being as the social safety net shrinks.

The transfer has come in the form of, among other things, longer waits for full Social Security benefits, the replacement of employer-provided pensions with 401(k) savings plans and more out-of-pocket spending on health care. Declining incomes, whether in retirement or leading up to it, compound the challenge.

[snip]

As the study, from the Consumer Bankruptcy Project, explains, older people whose finances are precarious have few places to turn. “When the costs of aging are off-loaded onto a population that simply does not have access to adequate resources, something has to give,” the study says, “and older Americans turn to what little is left of the social safety net — bankruptcy court.”

Of course this tip-of-the-iceberg crisis -- it's going to get much worse -- has been foreseen for a long time. The disappearance of defined benefit pensions in favor of inadequate 401(k) plans; the usurious nature of health care; skyrocketing housing costs -- a regular wage worker will not be able to retire in such an environment.

What was interesting about Siegel Bernard's story is the role that student debt plays in the financial woes of seniors:

A little more than a third of the older filers who answered the researchers’ questionnaire said that helping others, like children or older parents, had contributed to their seeking bankruptcy protection. Marc Stern, a bankruptcy lawyer in Seattle, said he had seen the phenomenon again and again.

Some parents, Mr. Stern said, had co-signed loans for $10,000 or $20,000 for adult children and suddenly could no longer afford them. “When you are living on $2,000 a month and that includes Social Security — and you have rent and savings are minuscule — it is extremely difficult to recover from something like that,” he said.

Others had co-signed their children’s student loans. “I never saw parents with student loans 20 or 30 years ago,” Mr. Stern said.

“It is not uncommon to see student loans of $100,000,” he added. “Then, you see parents who have guaranteed some of these loans. They are no longer working, and they have these student loans that are difficult if not impossible to pay or discharge in bankruptcy, and these are the kids’ loans.”

The Trump administration is actively working to make housing more expensive, not to mention what DeVos is doing to unleash for-profit colleges.

It is a sick, failed society, the paradigm for which was put in place as a reaction to the spirit of '68 50 years ago. I don't think it can continue much longer.