The Employee Benefits Research Institute (EBRI) published a report in Feb showing a rise in debt levels for households aged 55 and up. The researchers recorded data from 1992 – 2010 with a special emphasis on 2007-2010 (recession years).
The increase in debt was not uniform across age groups. Younger and still working heads of households had more debt than older, non-working households but this has always been true historically. The bursting of the housing bubble affected every age group but seems to have affected the oldest seniors most significantly, as their debt levels grew the fastest. Other key findings from the study:
- The percentage of families w heads 55 or older w debt remained steady between 2007-10 (63.0 – 63.4%)
- Debt payments as a percentage of income increased between 2007-10 (10.8-11.4%)
- Debt as a percentage of assets increased between 2007-10 (7.4-8.4%)
For households aged 75 and up between 2007 – 10:
- The percentage with housing debt increased from 14 – 24%
- The percentage with credit card debt increased from 19 – 22%
- The median credit card balance increased from $838 to $1800.
The data poses tough questions, particularly for the oldest group who are most likely to require expensive medical care. A 75 yo man and woman in 2013 will, on average, live for another 10 and 12 years respectively. An older person who leaves the workforce is highly unlikely to re-enter it and although more people are working past retirement age, the vast majority are not working beyond age 65.
- American Seniors Holding More Debt (blogs.wsj.com)