There's so much to love about our elders, isn't there? They know so much -- they're a treasure trove of information about our towns, our country, our families, ourselves. They often have a wonderful perspective on life, having lived through all kinds of challenges and struggles. Many of them spent their best years taking care of us. They have a lot to teach us and can enrich our lives immeasurably.

That's why I was greatly saddened to learn how many elderly Americans are having to declare bankruptcy. According to an AARP report, between 1991 and 2007, bankruptcy filings by those 65 to 74 or older surged 125%, and the rate for those 75 to 84 skyrocketed 433%. Yikes!

So what's going on? A likely culprit is health-care costs. According to the folks at Fidelity Investments, a couple retiring at age 65 this year will spend an average of $225,000 on health-care expenses in their retirement. This number has been rising briskly, as you can imagine. It's up nearly 5% since just last year.

Part of the problem is good -- that people are, in general, living longer. But that means that they have to support themselves in retirement for more years, with nest eggs that often aren't that big to begin with. In addition, the medical advances that have helped us live longer can sometimes be costly, eating up chunks of our nest eggs as we grow older.

Times have changed
Harvard Law professor Elizabeth Warren, who participated in the AARP study, has offered another factor, noting that modern retirees are much less financially secure than their counterparts in previous generations. After all, past retirees typically had pensions to rely on, while nowadays, those are being phased out and replaced by 401(k) plans and other retirement plans that depend on employee contributions. Just consider some of the many companies that have frozen all or part of their traditional pension plans (or are slated to do so):

  • Citigroup (NYSE:C)
  • Verizon (NYSE:VZ)
  • Goodyear Tire (NYSE:GT)
  • Dow Chemical (NYSE:DOW)
  • Lockheed Martin (NYSE:LMT)
  • General Motors (NYSE:GM)

As many as 25% of eligible workers don't take advantage of 401(k) plans at their workplace. Don't let yourself or your loved ones be among those. According to the 2008 Retirement Confidence Survey (RCS), more than a third of all workers have less than $10,000 saved for retirement -- and fully 28% of those aged 55 or older have $10,000 or less socked away. Even if they have $10,000 and it grows at 20% per year (a most unreasonable expectation) for 10 years, it will only total about $62,000 come retirement at age 65. A typical retiree won't last long on that!

What to do
So now that you're on alert, what can you do to help those you love not end up out of money long before they run out of time? Well, here are a few suggestions.

  • Get informed. And help them get informed, too. Learn as much as you can about available options. If you're going to be recommending investment choices to them, make sure they understand why you're recommending this or that and what the alternatives are. You can learn plenty in our 401(k) guide and our IRA Center.
  • For detailed guidance on retirement planning, I encourage you to test-drive, for free, our Rule Your Retirement newsletter service. A free trial will give you full access to all past issues. It regularly offers recommendations of promising stocks and mutual funds, too.
  • Look into lifetime income annuities (not variable annuities), which take a chunk of your wealth and in exchange for that, pay you a set amount for a set number of years, or the rest of your life.
  • Look into long-term care insurance, too. It isn't right for everyone, but it might be right for you or your loved ones.
  • Make sure that you don't become part of these depressing statistics about the elderly in poverty. Consider funding your 401(k) and IRAs generously. Look for top-notch mutual funds and individual stocks.

The future can indeed look scary, if you haven't prepared for it. Fortunately, no matter what shape you're in now, you have the power to put yourself in a better position tomorrow and in the future, if you take action now.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Dow Chemical is a Motley Fool Income Investor recommendation. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.