Across all states, California poses the highest risk of bankruptcy for Americans ages 65 and older, according to a study released by personal finance website Moneywise.
The study analyzed 11 factors to determine which states put elderly U.S. citizens at the greatest risk of bankruptcy. It determined each state’s risk of bankruptcy by assigning a risk score on a scale of 100 based on factors like poverty rates, debt-to-income ratios, health care expenses and overall cost of living.
For the purposes of the study, bankruptcy is defined as “a situation in which an individual’s income and assets are insufficient to cover their expenses or repay their debts,” an accompanying report explained.
California posed the highest risk with a score of 69.72 as “one out of every five elders has an annual income below 150% of the federal poverty line, which the Department of Health and Human Services has currently set at $15,600 per individual, $20,440 per couple and $31,200 per family of four,” the results explained.
On top of low earnings, the state’s population faces high everyday costs that contribute to a higher degree of financial risk. Supplemental data from the Missouri Economic Research and Information Center (MERIC) found that California residents face “27% higher average utility costs, 26% higher average transport costs, 12% higher average grocery costs, and 99% higher average housing costs than the national standard.”
The average annual health care cost per person in California is $10,200, a figure that tends to disproportionately impact older people.
Other states in the top 10 — and their average risk scores, according to the study — include Alaska (66.74), Massachusetts (65.92), Hawaii (63.34), Maine (60.53), New Hampshire (60.07), New York (59.03), Vermont (56.17), Virginia (55.11) and Florida (54.23).
Drivers for the scores in these states include health care and grocery costs in Alaska; health care and utilities costs in Massachusetts; housing and transportation costs in Hawaii; and low income levels among seniors in Maine.
The five states with the lowest scores — and thus with the least bankruptcy risk for seniors — include Iowa (19.95), Nebraska (24.79), Wisconsin (25.94), North Dakota (26.49) and Kansas (27.59).
