Despite a modest decline since the Great Recession in overall debt levels among older Americans (age 50-plus), debt has been rising for those over age 70, according to a recent study from the Urban Institute.
“Not only are they more indebted, but our findings suggest that their financial health — reflected by their credit scores and capacity to borrow — has worsened over time,” says the paper, “Financial Security at Older Ages,” written by the Urban Institute’s Senior Fellow Barbara A. Butrica and Senior Research Associate Stipica Mudrazija.
According to the report, home mortgages are the primary factor behind the rise in debt levels among consumers in their 70s and 80s. A greater percentage of them held mortgage debt in 2019 than they did in 2010 — the reverse of what was experienced by those in their 50s and 60s.
Compared with past generations, older seniors have taken out larger mortgages, are paying them off over a longer period of time, and are more likely to refinance, noted the authors.
More adults age 70+ are also holding auto loans and student loans. “It is likely that older adults are taking out some of these loans for their children and grandchildren, although we cannot be sure from the data,” the report noted.
Over the same period of time, credit card debt (the largest source of non-mortgage debt for consumers age 70 and over) slightly declined among those 78 and older; it slightly rose for those age 50 to 59.
Overall, median debt in 2019 was $10,800 for those age 70 to 79 (up from $6,800 in 2010) and $2,400 for those age 80 to 89 (up from $1,500). This compares with $34,700 for those age 50 to 59 (down from $45,300 in 2010) and $21,700 for those ages 60 to 69 (down from $26,100).
Among the report’s other findings, “Older adults from socioeconomically disadvantaged areas carry debt well into their retirement years, whereas those who live in wealthier zip codes appear to deleverage as they age.”
Wealthier people are more likely to use debt to acquire property and build wealth, but may pay off that debt when entering retirement or shortly afterwards, said the authors.
Median debt for 80- to 89-year-olds is higher for those living in nonwhite zip codes than for those living in mostly white zip codes, according to the research. When just non-mortgage debt taken into account, adults ages 70 and older who resided in mostly white zip codes also had less debt than their counterparts in mostly nonwhite areas.
In explaining the debt disparities, the study’s authors also noted that less well-off older adults may have jobs that are harder to perform at advanced ages and they may have more health limitations.
“The rise in debt among the oldest Americans is especially concerning because the likelihood of experiencing a negative event that jeopardizes one’s financial security increases with age,” concluded the report.
The researchers used consumer records from a major credit bureau and followed the same consumers from 2010 to 2019. They supplemented this data with zip-code level information from the American Community Survey on neighborhood characteristics. This included racial and ethnic composition, median household income, homeownership, median housing prices, housing cost burdens and unemployment rates.