Boomers beware: The percentage of adults 55 and older who are filing bankruptcy is growing at a faster rate than younger adults, according to the U.S. Census Bureau’s Center for Economic Studies.
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Reason: You Can’t Keep Up With Medical Bills
According to the Kaiser Family Foundation, about 30 percent of U.S. adults have had trouble paying medical bills in the past year. Although medical debt is a problem for Americans of all ages, it’s an especially difficult problem for retirees because healthcare costs increase with age.
Health issues that lead to large medical bills could even force some retirees into bankruptcy, said Dominique Henderson, a certified financial planner and founder of DJH Capital Management in Dallas. “An unexpected accident or disease can spend down your nest egg,” he said.
How to Get Ahead of the Medical Debt
To give you an idea of what your healthcare costs might look like, Fidelity Investments estimated that a 65-year-old couple retiring this year will need $275,000, on average, to cover medical expenses in retirement.
If you retire before you’re eligible for Medicare at age 65, you need to get health insurance coverage on your own to cover catastrophic events, Henderson said. But even with medical coverage, you must have an emergency fund to cover out-of-pocket medical costs.
Your best bet is simple: Expect the worst and set aside savings for those moments.