The savings gap for Baby Boomers: Bankruptcy could help you stay retired
With just $15 left in their bank, one Baby Boomer made peace with the fact that she had less than others. Many retirees are finding themselves in this same position, which is why it’s an important topic to discuss.
It’s widely known that this generation, the Baby Boomer generation, has a wide savings gap compared to some past generations. In one case, a woman decided to move to survive when her fortune disappeared during the financial crisis. Where she once had been a millionaire, she now had to file for Chapter 13 bankruptcy to repay her debts. During it, her balance fell to just $15 in the bank.
The woman said that her repayment plan left her $1,000 to live on, so she had to leave her home in California. She moved to Iowa, where the cost of living was much lower. The better affordability did come with trade-offs, though, she admitted. She said that the areas hadn’t been gentrified. Many lower-cost areas, like the one she chose in Iowa, had no yoga classes and had weather that was less than desirable.
Her situation is not unlike others in the United States. According to the Employee Benefit Research Institute, people in the United States who are between the ages of 65 and 74 have over five times the debt obligations than those of the same age range just twenty years ago. The median savings for households nearing retirement had dropped by 32% in the last 10 years, leaving many with an average of $14,500.
How did so many Baby Boomers end up with less than previous generations?
One of the main problems was the financial crisis, which meant that people lost their jobs, created medial and credit-card debt, faced pay cuts and saw a decline in the value of their homes. Some of these individuals had children in college, so they were also paying for tuition when they might otherwise have been saving for retirement.
Many Baby Boomers will struggle if they cannot make ends meet, which is why more older Americans are heading back to work even though around 85 to 90% surveyed said they want to stay home. Debt is one of the major causes of this problem, so remember that bankruptcy could be an option that helps. Reducing debt and getting a solid budget into place could help you secure your retirement.
With $15 Left in the Bank, a Baby Boomer Makes Peace With Less – WSJ