This story in today’s NYTimes got me thinking. As Bills Mount, Debts on Homes Rise for Elderly:
“As a result, the cushion that could provide financial security for older people — their homes — is no longer so secure. People reaching retirement age are now less likely to own their homes free and clear than their predecessors, according to an analysis of government housing and Census data.”
So the low interests rates old people receive on their savings have forced them to take out reverse mortgages for money to live, meaning they’ve handed their homes to the banks.
Meanwhile there is huge prescription drug, medical bill and nursing home tax.
Why is this happening, given that over all the elderly are financially better off today than in any previous generation? In various consumer surveys and bankruptcy studies, heavy health care expenses are consistently cited. “It’s always medical bills – and credit cards to pay for medical bills,” said Barbara May, a consumer bankruptcy lawyer in Arden Hills, Minn., and a board member of the National Association of Consumer Bankruptcy Attorneys.
She described one of her current cases, involving an elderly couple who have amassed $44,000 in credit card debt largely for medications to treat heart disease, high blood pressure and diabetes, among other ailments. Ms. May described the couple’s adult son weeping in her office.
And if you have a parent who has been through this, you really know what I am talking about. If you end up in a nursing home your assets are taxed at 100% — every penny you ever saved, and your house, and everything else goes away to pay the nursing home.
These add up to huge – maybe 100% – taxes on the elderly. But the government is not collecting these taxes. These taxes go to the banking or drug or nursing home corporations.