We are being subjected to polar extremes on the subject of the financial well-being of retirees.  Kevin Drum in Mother Jones claims we are looking at a world where “relatively speaking, retirees are doing quite a bit better than current workers. In fact, their incomes are growing more strongly than pretty much any other age group.”

Drum cites a “critic” who agrees with him.  “Seniors’ income has been rising relative to the income of the typical working household because the typical working household is seeing their income redistributed to the Wall Street crew, CEOs, doctors and other members of the one percent….” — predictable Mother Jones scapegoating.

In contrast, CBS News proclaims: “Entering retirement broke and bankrupt.”  CBS News blames seniors’ plight on “raising the retirement age and requiring seniors to pay more out-of-pocket health care costs, and a shift in risk from government and corporations onto individuals.”  As well, CBS News cites the lack of a private pension, credit card balances, and mortgages that may persist into workers 60s and 70s.  Basically CBS and Mother Jones disagree on the circumstances of seniors’ plight, but they agree on whom to blame – the “1 percenters.”  What a surprise.

Our increasing retirement age is aligned with increasing life expectancy.  Health care costs are incurred over our longer life and our system is designed so that ordinary people (not just seniors) pay the cost.  Credit card balances are a result of people’s independent spending choices and excesses are routinely avoided by those who choose self-discipline.  Furthermore, anyone paying attention will acknowledge that they have a personal obligation to save for retirement.

Workers participating in employer retirement plans save between 6.2% and 7.5% of their wages. These are unlikely to become retirees who are “broke and bankrupt.”  People without an employer retirement plan can see retirement coming decades before it hits, and they need to put funds aside for that day.

If the social safety net is expanded to bolster low income levels (including pension inadequacies), health care costs, credit card excesses, and delinquent mortgages, total government largesse will create a huge sinkhole in everyone’s net income.

Some people in or near retirement have daunting financial challenges to endure.  About 100,000 seniors each year are so debt ridden that they seek bankruptcy protection.  The opportunities to earn well and save adequately for retirement may have passed for them.  The many chances to avoid excess credit card spending may all have passed, and they may not yet be destitute enough to qualify for Medicaid.  Bankruptcy may be the only realistic financial solution.

Bankruptcy does not create wealth to pay off debts.  It merely shuffles the debt of one person (plus legal fees) into the costs borne by others. In that respect it is not as “personal” as some would like to believe – it hurts others.

For households in 2014 with a reference person aged 55-64, the average income was $75,241; for the 17 million households with a reference person aged 65-74, the average income was $52,366; and for the 13 million households with a reference person 75 or older, the average income was $35,467.

After age 65, many will find it difficult to live in financial comfort, especially in urban areas.  Still, many seniors bravely tough it out by moving to lower cost small towns such as San Antonio, Texas, or rural areas such as central Florida.  Retirees can also help themselves by cutting back on lavish entertainment (Hamilton and river cruises) and by following a thoughtful budget. Seniors who are physically able might continue employment, perhaps for modest hourly wages.  There may inevitably be bankruptcies, but most can be avoided by prudent saving and planning in the four decades before retirement.

(Ideas from the CBS News article and the “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society” stem from the City Bar Justice Project’s Consumer Bankruptcy Project.  The project is intended to provide free legal assistance to low-income consumers in New York City.)