WASHINGTON – Feb. 13, 2014 – Debt levels among Americans age 55 and older continues to rise, which could put millions of baby boomers’ homes at risk, according to a new report, “Debt of the Elderly and Near Elderly, 1992-2013,” from the Employee Benefit Research Institute in Washington, D.C.
The average debt among this age group is $73,211. The percentage of Americans age 55 and older with debt payments greater than 40 percent of their income rose to 9.2 percent in 2013, from 8.5 percent in 2010. What’s more, the percentages of families whose debt payments are excessive relative to their incomes is at — or near – the highest levels since 1992, according to the report.
“Consequently, even more near-elderly and elderly families are likely to find themselves at risk for severe changes in lifestyle after retirement than past generations,” the report states.
Housing is one of the major causes that are pushing debt levels higher, the report notes. In 2013, nearly four in 10 families — or 39 percent — where the head of the household was age 55 or older had housing debt. That’s up from 24 percent in 1992.
Forty-two percent of households aged 65 to 74 had housing debt in 2013 compared to only 18 percent in 1992. Twenty percent of households aged 75 and older had housing debt in 2013 compared to 10 percent in 1992.
Such high percentages could translate into “either a forced sale [of a primary residence] or limited ability to use any home equity for funding retirement,” according to the study. “This level of debt, along with asset values still recovering from the 2008 recession, will add to the difficulty for many people of this age to save for a retirement that will not run short of money.”
Source: “Why Mortgage Debt Threatens Boomers’ Retirements,” MarketWatch (Feb. 2, 2015)
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