New Study: Among all U.S. states, California poses greatest risk of bankruptcy to its senior citizens
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Updated: October 02, 2024
Key takeaways
- New data analysis looks at various factors — including poverty rates, healthcare expenses, debt ratios and utility costs — to calculate elderly-bankruptcy-risk score for every U.S. state.
- Elderly citizens in California face the greatest risk of bankruptcy, with a risk score of 69.72 out of a maximum of 100.
- Iowa seniors are least vulnerable to bankruptcy threats, with a risk score of 19.95.
New research has shed light on the states where elderly individuals face the greatest risk of bankruptcy, pinpointing California as the riskiest and Iowa as the most secure.
The study, conducted by the personal finance publisher Moneywise, analyzed 11 factors to determine which states put elderly US citizens, those over the age of 65 years old, at the greatest risk of bankruptcy. The study determined each state’s risk of bankruptcy by assigning each state a risk score out of 100 based factors such as poverty rates, debt-to-income ratios, healthcare expenses and overall cost of living. In 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.
States most vulnerable to elderly bankruptcy
California poses the greatest danger to the financial health of its elderly population, with a total risk score of 69.72.
In the country’s most populous state, one out of every five elders have 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.
In addition to low earnings, the whole state population encounters high everyday costs, which contribute to great financial risk. According to MERIC data, California faces 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. Further highlighted by its average debt-to-income ratio, which stands at 1.75 as of 2022, the average healthcare cost per person is $10,200.
States with the highest risk of elderly bankruptcy
| Rank | State | Risk Score |
|---|---|---|
| 1 | California | 69.72 |
| 2 | Alaska | 66.74 |
| 3 | Massachusetts | 65.92 |
| 4 | Hawaii | 63.34 |
| 5 | Maine | 60.53 |
| 6 | New Hampshire | 60.07 |
| 7 | New York | 59.03 |
| 8 | Vermont | 56.17 |
| 9 | Virginia | 55.11 |
| 10 | Florida | 54.23 |
Alaska is the second-most threatening state, with a score of 66.74. With the country’s second-highest health care costs at $13,600 per capita, just cheaper than New York, a grocery shop here will also cost you 24% more than the national average, as shown by MERIC data. Massachusetts, which ranks third with a score of 65.92, also charges high health care expenses at $13,300 - the third highest in the country. Here, utility bills will also cost you 34% more than the rest of the country. Hawaii follows with a score of 63.34, where housing costs alone would set residents back 213% more than the national average, with an additional 35% for transport. Finally, Maine has calculated a risk score of 60.53. In this state, 5.4% of the elderly population is struggling under the 50% poverty line margin.
The remaining top 10 are New Hampshire with a score of 60.07, New York with 59.03, Vermont at 56.17, Virginia at 55.11, and Florida at 54.23.
States least vulnerable to elderly bankruptcy
Iowa was found to be the safest state, with a final risk score of 19.95. Only 1.4% of the elderly population are below the 150% poverty line, with access to relatively affordable everyday expenses. Housing costs are 26% cheaper than the national average, utility costs are kept 4% lower, and grocery costs are 3% more affordable. The average healthcare cost per person is $9,700, 5% cheaper than California’s average. The state also maintains an average debt-to-income ratio of 1.24.
States with the lowest risk of elderly bankruptcy
| Rank | State | Risk Score |
|---|---|---|
| 1 | Iowa | 19.95 |
| 2 | Nebraska | 24.79 |
| 3 | Wisconsin | 25.94 |
| 4 | North Dakota | 26.49 |
| 5 | Kansas | 27.59 |
| 6 | Illinois | 31.56 |
| 7 | Minnesota | 31.60 |
| 8 | Indiana | 32.53 |
| 9 | Michigan | 32.62 |
| 10 | Missouri | 33.29 |
Nebraska is the second-most secure, with a score of 24.79. With the second-lowest utility costs in the U.S., approximately 14% cheaper than the nationwide average, only 12.9% of the senior population falls beneath the 150% poverty line. Wisconsin, which ranks third with a score of 25.94, shows even lower poverty rates, with just over 1% of seniors below the bottom 50% poverty line. Healthcare costs in Wisconsin are also 4% cheaper than the national average, at $9,900 per capita. North Dakota takes the next spot with a score of 26.49, showing one of the lowest average debt-to-income ratios and offering groceries at a 6% cut compared to other states. Finally, Kansas receives a risk score of 27.59, where housing costs are 33% below the national average - the cheapest in the country.
Rounding out the top ten is Illinois with a score of 31.56, Minnesota with 31.60, Indiana with 32.53, Michigan with 32.62, and Missouri with 33.29.
Kris Bruynson, VP of Marketing and Product for Moneywise said, “The dream of a secure retirement can quickly become a nightmare for seniors facing overwhelming debt. Unaffordable mortgages, overspending, and rising healthcare costs can all contribute to a financial crisis. But for older adults, bankruptcy can be especially devastating, instantly wiping away a lifetime of savings. The vulnerability of elderly debtors is particularly concerning. As people age, their ability to earn income often decreases, while healthcare expenses can skyrocket. This can leave retirees with a crushing burden of debt and few options for managing it.
Seniors make up 8% of bankruptcy filers, with the trend only increasing. This highlights the urgent need for a more stable retirement system, where each state should consider implementing programs and policies that protect older adults from further financial hardship.”
If you use these insights, please link credit to https://moneywise.com/, as they are responsible for compiling and analyzing the data.
Sources: United States Census Bureau, KFF, Federal Reserve, Missouri Economic Research and Information Center
Methodology
A total of 11 factors were used to compile the index, which included:
The raw data for each factor was cleaned, checked, and standardized on the same scale from 0 to 10, where 0 and 10 represent the worst and best values present in the data to allow for accurate comparison between factors. Factors for which a high score would be negative were subtracted from 10 to invert their scoring.
Each factor was assigned weighting, reflecting its importance in the analysis. Once the weightings were assigned, the total score for the factors was calculated, producing an overall index score out of 100 for each entry, upon which the final ranking is based. Scores closest to 100 represent the states where the elderly are most likely to become bankrupt.
States with the highest risk of elderly bankruptcy
| Rank | State | Risk Score |
|---|---|---|
| 1 | California | 69.72 |
| 2 | Alaska | 66.74 |
| 3 | Massachusetts | 65.92 |
| 4 | Hawaii | 63.34 |
| 5 | Maine | 60.53 |
| 6 | New Hampshire | 60.07 |
| 7 | New York | 59.03 |
| 8 | Vermont | 56.17 |
| 9 | Virginia | 55.11 |
| 10 | Florida | 54.23 |
| 11 | Arizona | 53.43 |
| 12 | Nevada | 52.98 |
| 13 | New Jersey | 52.03 |
| 14 | Washington | 50.33 |
| 15 | Oregon | 49.98 |
| 16 | Connecticut | 49.98 |
| 17 | Montana | 48.67 |
| 18 | West Virginia | 48.51 |
| 19 | Maryland | 47.70 |
| 20 | New Mexico | 47.11 |
| 21 | Rhode Island | 46.61 |
| 22 | South Carolina | 45.43 |
| 23 | Colorado | 44.53 |
| 24 | North Carolina | 44.02 |
| 25 | Mississippi | 43.28 |
| 26 | Pennsylvania | 43.28 |
| 27 | Alabama | 42.28 |
| 28 | Delaware | 41.96 |
| 29 | Kentucky | 40.43 |
| 30 | Ohio | 39.45 |
| 31 | Louisiana | 39.41 |
| 32 | Idaho | 37.35 |
| 33 | Utah | 37.26 |
| 34 | Texas | 36.54 |
| 35 | Oklahoma | 36.33 |
| 36 | South Dakota | 34.94 |
| 37 | Tennessee | 33.86 |
| 38 | Georgia | 33.48 |
| 39 | Wyoming | 33.46 |
| 40 | Arkansas | 33.30 |
| 41 | Missouri | 33.29 |
| 42 | Michigan | 32.62 |
| 43 | Indiana | 32.53 |
| 44 | Minnesota | 31.60 |
| 45 | Illinois | 31.56 |
| 46 | Kansas | 27.59 |
| 47 | North Dakota | 26.49 |
| 48 | Wisconsin | 25.94 |
| 49 | Nebraska | 24.79 |
| 50 | Iowa | 19.95 |
The Moneywise Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Moneywise Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.
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