Seniors have begun filing for bankruptcy at increasingly high rates. Some reports estimate that senior filings have increased more than 12% over the last 13 years and now account for approximately 22% of all bankruptcies in the U.S.
Due to increased healthcare costs, depreciating home values, and rampant unemployment, seniors, who have traditionally prided themselves on paying their bills and not having bad credit, have depleted their saving and charged extensively on their credit cards. Many seniors have concluded that their retirement will not be financed with their 401ks as they had hoped, but they will now have to depend entirely on their Social Security benefits. Unfortunately, due to the economic condition of the country, even that plan may be in jeopardy.
CNNMoney reported Friday that AARP, who previously opposed changes to the Social Security retirement program, now admits that some type of cuts or program changes are needed to ensure the solvency of the program.
The Wall Street Journal quoted the lobbying group by stating that they are ready to “drop their longstanding opposition to cutting Social Security benefits.” But the group maintains that any changes to the program should “do as much as possible to maintain benefits” and provide adequate time for older Americans to adjust to the changes.
Unfortunately, there has not been a consensus between legislative members about what is necessary to make Social Security solvent. AARP admits that even between its own members there has not been a consensus.
Changes which have been proposed include progressive indexing which would lower payments for recipients who have a higher-income, changing the initial benefit that retirees may be eligible to receive, or raising the retirement age. Others have proposed privatization of retirement benefits which would allow Americans to begin to make their own investments in stocks and bonds.
AARP strongly opposes any privatization efforts but has supported raising the amount of income which is taxed to fund Social Security benefits. They believe that higher income earners could most readily absorb the additional tax.
There has been mixed reactions from other advocacy groups to the AARP news. Max Richtman, acting CEO of the National Committee to Preserve Social Security and Medicare, said, “We’re extremely disappointed.” While others such as Jonathan Cowan, president of Third Way, a centrist Democratic think tank stated he believes, “Today marks a watershed moment in American politics. For decades, AARP has stood against any substantial changes to Social Security. Now that they have opened the door to reform, it is time for lawmakers to walk through it.”
No one wants to see massive cuts made to our standard of living, but we will all have to begin to make sacrifices to get our country solvent. Clearly, to address the current economic crisis and reduce the debt obligations of America, changes will have to be made to Social Security benefits, and the sooner all of us can begin to work together to make those changes, the better.
Hiring a Bankruptcy Lawyer
Filing Chapter 7 Bankruptcy may allow you to discharge most of your unsecured debt. Filing for Chapter 13 Bankruptcy may allow you to reschedule your unsecure debt payments with more favorable debt repayment terms and repay your debts over a three to five year period.
Everyone does not qualify to file for bankruptcy protection, and bankruptcy laws can be difficult to understand. If you are considering bankruptcy, contact a bankruptcy lawyer. Find out if filing for bankruptcy is right for you.
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