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Debt Rising Among Older Americans: EBRI

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Older Americans owe more money, and they owe enough to make it a problem. 

That’s according to a new report from the Employee Benefit Research Institute, which found that families headed by someone 55 or older saw their debt levels increase from 2010 to 2013, the latest year for which data is available.

The report, “Debt of the Elderly and Near Elderly, 1992–2013,” found that such families carried a debt load of 63.4% in 2010 and that, by 2013, that had risen to 65.4%.

Perhaps that doesn’t sound like such a huge increase, but the level of debt has been rising since 1992, when it totaled 53.8% — more than 10% lower than its current level. 

It’s one thing to owe lots of money, but when the payment level is high, too, it can be a recipe for disaster.

And among these older folks, the percentage of families whose payments amount to more than 40% of their income — an amount generally recognized as too much debt load — has risen as well: from 8.5% in 2010 to 9.2% in 2013. 

Why do they owe so much? In a word, housing. “Housing debt drove the change in the level of debt payments in 2013, while the non-housing (consumer) debt-payment share of income held stable from 2010,” Craig Copeland, EBRI senior research associate and author of the report, said in a statement. “Housing debt was the major component of debt for families headed by individuals ages 55 or older.” 

Copeland also said that such high housing debt levels are putting those families at risk, not just for retirement, but also for losing their homes. 

There was some less-dismal news in EBRI’s report.

The older the head of household was, the less likely the household was to have debt, and among those older households, the lower the average amount of debt. The percentage of households headed by someone 75 or older that carried debt was 41.3%, compared with 78.5% of families headed by someone in the 55-64-year-old age range.

The bottom line, however, is the debt is a growing problem for the elderly.

— Check out Stop Checking Your Retirement Portfolio So Often: Columbia Study on ThinkAdvisor.