Baby boomers hoping to transition into a comfortable retirement may find themselves held back or overwhelmed by outstanding debts. Although credit card bills often take up a large portion of a household’s monthly budget, medical issues often contribute to personal bankruptcies.
Medical bills can create an unmanageable debt load
Approximately 600,000 Americans filed for bankruptcy protection during 2018. As reported by NewsChannel 5, the majority of individuals surveyed could not afford to pay a $400 medical bill. An unexpected visit to an emergency room could leave a baby-boomer household with serious financial challenges.
A health insurance plan covered by an employer may have high deductibles for certain procedures or surgeries. Unplanned out-of-pocket costs for emergency health care could cause an individual to dip into a savings or retirement account. It could also lead to paying withdrawal and tax penalties.
Time off needed for recovery often means a loss of income
Medical treatment usually requires taking some time off from work to heal and recover. Many individuals, however, do not have sufficient vacation or sick pay that would cover an extended absence from work.
A sudden loss of income often causes families to begin using credit cards as a temporary way to cover necessities. The increase in borrowing, however, leads to higher monthly payments, which many out-of-work individuals cannot afford.
A lack of adequate financial resources may derail a retirement plan
Many baby boomers look forward to retirement, but a crushing debt load makes it impossible to leave their jobs. Bankruptcy may provide a way for age 50+ individuals and seniors to meet their personal financial needs and also create a workable retirement budget.
To afford living on a fixed income requires careful preparation. A fresh start through bankruptcy may help financially overwhelmed individuals restore their retirement hopes.