Baby Boomers, Accelerated Retirement & More In Debt Than Ever?

Baby boomers are retiring at an accelerated pace in 2020 compared to previous years. In the third quarter of 2020 alone over 28.6 million Baby Boomers retired from the labor force. This represents an increase of 3.2 million more Boomer retirements than the 25.4 million reported in the same period of 2019. It is important to notice that this is before the COVID-19 breakout, and the numbers have been increasing exponentially ever since. 

Although retiring debt-free is the ideal scenario most people aim for, this is not the case for a great number of Baby Boomers. The average boomer retires with less than $20,000 in savings, with projections indicating that this figure will only worsen due to over 30 million Americans applying for unemployment benefits, as it is a greater challenge for people in their fifties and above to find jobs.

The most common types of debt among baby boomers are car loans (32%), mortgage (40%), and Credit Card debt being the most common debt held by boomer households representing 42%. This makes sense when taking into account that the average boomer possesses 3 or more credit cards, compared to an average of 1.64 credit cards possessed by Gen Z’s. 

Baby boomers have also suffered a greater number of substantial financial hits. Examples include: divorces, layoffs, lack of raises or pay cuts, etc. Combined with an increased cost of health insurance.

The truth is that people are living longer, and baby boomers consequently end up working into their later years, in an attempt to push off retirement as much as they can. They do this by creating start-up businesses, and taking on extra employment, all while accumulating more debt. This is not the best strategy for people in this generation as a serious health issue or financial distress can translate into highly unfortunate scenarios. 

All this has made Bankruptcy an attractive option for baby boomers. Filing for Chapter 7 or Chapter 13 bankruptcy can prove to be a smart backup plan for boomers when they are unable to repay their debts. 

After filing for Chapter 7 bankruptcy you are able to wipe out all your debts. However, to qualify you are required to pass the means test. The means test is an income test to determine whether a person has a high enough income to partially repay their debt. Most baby boomers that pass the mean test are able to maintain their equity in their homes, cars and retirement accounts. 

Chapter 13 bankruptcy enables you to repay your debt in a reorganized payment plan with manageable payments, making it a better option for boomers who are still working and saving up for their retirement. 

If you are considering bankruptcy, or consider you might be in financial distress and unable to cover mandatory payments, request a Free Consultation before taking any action.

We, at Adams Law, PA, are dedicated and passionate in helping debtors take control of their personal finances and get out of debt through a bankruptcy filing. Contact us by phone (844) 321-6168 or by email lawyers@richardadamlaw.com to request your free consultation and no-obligation case evaluation.