Why debt among older Americans is going up
While much has been made of millennials and their struggles with student loan debt, seniors are increasingly challenged by mounting financial burdens. The outstanding amount owed in 2019? An estimated $1.15 trillion, according to Policy Genius. Then numbers were similarly high for 60-something seniors whose collected debt was $2.14 trillion.
Carrying that kind of debt entering retirement can make a sense of financial security harder to come by.
“Rather than enjoying their golden years, many of our older generation continue to work just to keep ahead of their bills,” said Deacon Hayes, personal finance expert and founder of Well Kept Wallet. “In addition, some have either depleted their savings to pay off debt, or have no savings at all due to a lack of funds.”
Here’s a closer look at how student loans, mortgages and other debts are shaping retirement prospects for older Americans.
How much debt does the average retiree have?
Data from the Congressional Research Service offers a closer look at how much the typical elderly household, meaning aged 65 or older, is carrying. The median household debt, according to the numbers, is $31,050. But the real average debt clocks in at $86,797.
WHEN USING YOUR 401(K) TO PAY OFF DEBT MAKES SENSE
The bulk of that debt is mortgage loans associated with seniors’ primary residences. The remainder is spread across other types of debt, including student loans, car loans, credit cards and home equity loans.
Student loans are one of the fastest-growing debt categories for seniors. According to an AARP report, those 50 and over owe 20 percent of the country’s $1.5 trillion in outstanding student loans. The Federal Reserve Bank data shows that those aged 60 to 69 who are newly retired or poised to enter retirement have approximately twice as much student loan debt as seniors aged 70 and older.