Tennessee Voices

By DAN OWENS
Published: September 14, 2008, Tennessean.com


"Bankruptcy filings soar for senior citizens" was the screaming headline in newspapers around the country, including The Tennessean a week or so ago.

The Associated Press-generated article quoted a study by Harvard Law professor and Huffington Post blogger Elizabeth Warren that reports that seniors are rushing to bankruptcy courts in huge numbers because of economic conditions and high health-care costs.

As director of the 10-year-old grassroots National Active Retirement Association (NARA), a group that carefully studies the boomer and beyond "Age Wave," I was astounded. Through NARA research, I know that 77 percent of all assets in America are held by those 50-plus. I also know that 50-plus folks on average have higher disposal incomes, savings, pensions and equity than those entering the workforce, young newlyweds and those starting a family.

As the National Active Retirement Association is preparing to host regional and national 50-plus industry experts at the ninth annual NARA business conference at the Myrtle Beach Hilton Resort Oct. 1-3 (www.retirementlivingnews.com), I decided to investigate this study a little more. A number of Tennessee government officials are planning to attend this conference to learn the latest information about doing business with people over 50.

The main statistic presented was that bankruptcy among citizens aged 75-84 had soared over 400 percent from 1991-2007. The study also referred to huge bankruptcy increases among baby boomers, as well. Sounds horrifying, doesn't it? My initial reaction was our government must do something. What else could possibly pull at the heartstrings of Americans more than the image of the elderly standing in lines with their walkers in oppressive heat at the courthouse?

But, wait a minute … did the study say the starting point in the survey was 1991? Wasn't that a time when George H.W. Bush was president and Ned McWherter was Tennessee's governor? Why send out an emergency alert that alarms people based on a time frame that stretches back three presidents? Could it be that more recent data just didn't reflect the facts that were presented?

A closer inspection of this AARP-sponsored study did bear out the fact that more recent bankruptcy statistics are actually more favorable than any since 2001, the tail end of the Clinton years. Based on the study's actual statistics and an overlay of census data, the following is true:

• Far, far fewer bankruptcies — just a little more than one-half the number — were filed in 2007 than in 2001. In fact, there were over 900,000 fewer bankruptcies in 2007 than in 2001 and almost 200,000 fewer bankruptcies in 2007 than in 1991. All age segments filed fewer bankruptcies in 2007 than in 2001.
  
  
• How about the bankruptcies among the 75-84 senior citizen age segment? Those numbers also fell by 8,500 from 2001 to 2007 to just over 20,000 bankruptcies while the number of citizens in this age group rose rapidly. When you look at the number of bankruptcies as a percent of the population, bankruptcies actually fell among these seniors from just under four tenths of one percent in 2001 to about one-quarter of one percent in 2007.
  
  
• When you look at the 2007 bankruptcy data as a percentage of population, you find that more bankruptcies are being filed among Gen-Xers (27-43) and Millennials (26 and younger) than the baby boomer and beyond generation, as well as elderly residents. Folks aged 35-44 were the No. 1 age group filing for bankruptcy in 2007. Not too far behind were those aged 25-34.

So, with about 1.1 million (out of a total U.S. population of 300 million) filing for bankruptcy in 2007, just over 54 percent were aged 44 and younger; just under 46 percent were aged 45 and older. So, why would a prominent educator/social commentator like Elizabeth Warren try to paint a picture that retirees and seniors are all going broke?

Could it be that the study reaches so far back in history to try to create as much gloom and doom as possible from voters before the election to make the case for change? Hypocritically, AARP, a sponsor of this alarming study, touts in its media materials that the median income of its 34 million 50-plus AARP The Magazine readers has increased 16 percent in the past three years. Additionally, the magazine claims its readers gained $663 billion — yes, that's billion — in total household income in the past three years.

So, which is it? Is the "boomer and beyond" 50-plus generation broke or wealthy? Sadly, a certain percentage is like all Americans — being squeezed by fuel prices, and prescription drugs and having to tighten their belt to barebones essential spending. However, at NARA, we know that many retirees have plenty of money to spend and invest. We see towns and states around Tennessee and the South gearing up to attract as many retiree couples from other states as they can get. And, in this challenged economy, more often than not, it's the buyers with gray hair you'll see at the closing table.

This is why we are focusing on the tremendous business opportunities that the fast-growing boomer and beyond market is presenting to businesses everyday. It's a topic that our business members are excited about coming to the Grand Strand to discuss.