I read a disturbing article in the New York Times recently, which stated that bankruptcies for people over 65 in America have increased threefold from what they were in 1991. This same group of over 65s also account for more than any other group filing for bankruptcy.
A number of studies have concluded that this statistic is the result of financial risk shifting from governments to individuals over the last three decades.
Rising healthcare costs, inadequate savings, and very little safety net means Americans are turning to the last resort for a government safety net - bankruptcy filing.
However, by the time they do this, many people have racked up credit card debt and used what savings they had trying to survive. Which means they literally have nothing, and the financial institutions who have given them credit will never be paid.
You don’t have to be a genius to see the flow on effect of this. Many of us know Australia is headed down a similar path in the future - with Griffith University proving that up to 80% of Generation X are possibly falling short of a comfortable retirement. It's not too hard to imagine a system where our health care would not be funded by tax payers to the same extent it is today, and people use what savings they have trying to survive till they run out of options.
While I sound like a voice of doom, you as financial advisers have the ability to understand what this could mean for our society. I also know that more than any other profession, advisers have the ability to help people change this situation and prepare themselves for retirement.
With the Royal Commission causing much upheaval, and a signification proportion of advisers set to leave the industry, this future task is critical to keep in mind when speaking to people that can be influenced by quality financial planning.
If ASIC’s recent report into credit cards told us that one in six Australians are in the kind of credit card debt they may never be able to pay back, we have a serious job to do to get people out of debt and into a situation where they can contribute more to their super and prepare for the future.
Our children deserve a better future as tax paying adults than being burdened with a generation of people who cant afford to retire and either have to bankrupt themselves or live well below a quality standard of living.
We will continue to campaign to increase peoples awareness of this situation. My book, The Breakfast Club for 40 Somethings, is continuing to sell, and happily I now see comments on social media that say things like “off to see a financial planner for me”.
More programming, media and education to come from us here at No More Practice Education to keep the future situation top of mind enough that people engage with financial advice.
So my message to you, our valued community, is hang in there. You are needed more than ever.
Until next time,
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here.
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