Debt Rising Among Older Americans
Should financial responsibility fall on the elderly in a bad economy?
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The Responsibility Project
There is no question that the recession has been difficult on individuals from all walks of life, but a recent article in The Wall Street Journal suggests it’s been hardest on the elderly. Unable to pay off costly first and second mortgages, older Americans are postponing retirement and reducing their standards of living.
“Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20 [percent] had secondary mortgages, including home-equity lines,” the Journal reports. “That was up from just 22 [percent] and 12 [percent], respectively, in 1994.”
Before the housing crisis, daunting mortgages were often solved by selling a house and buying a smaller home for retirement. Today, like much of the population, many older Americans owe more than their houses are worth, so it’s not as simple as selling.
California widower Robert Pyle, for example, made a series of decisions at age 73 that resulted in the loss of his $650,000 home and $500,000 life savings. Now 81, Mr. Pyle is suing the financial institutions and various people he trusted with his money, claiming he should be compensated because he is too old to bear full responsibility for his actions.
"I still make pretty good decisions about most things," said Mr. Pyle, a retired aerospace engineer. "But for others, I guess I’m not as sharp as I was before, and people take advantage of that."
Mr. Pyle is part of a growing trend of older Americans filing lawsuits against people and companies they say defrauded them of precious financial resources. Their argument is the same: because they are older they should not be held responsible.
According to the National Center on Elder Abuse, protecting senior citizens from financial victimization--even when it’s caused by their own mistakes--is now critical.
“If we don’t solve this,” said a spokeswoman, "millions of older people will suddenly be reliant on their families or the government."
After Mr. Pyle’s loss, he was forced to move into a small room in his stepdaughter’s house. "I guess I’m just kind of waiting for the end," he said.
But allowing people to void contracts, get refunds and abdicate responsibility simply because of advanced age is unfair, critics insist. One of the defendants in Mr. Pyle’s lawsuit says, "There is no business on earth that can function if its customers can say, ‘I’m tired of abiding by this contract, so I want out because I’m old.’"
Tell us what you think:? Should elderly people be exempt from responsibility if they make bad financial decisions, especially in the wake of the financial crisis?
(A portion of this story was previously published as “The Age Defense” on The Responsibility Project on 7/8/08)