Older adults generally carry less debt than younger ones because people tend to pay off debt as they get closer and retire. But in recent decades, each team of seniors has been more indebted than ever.
“A group of older people is in financial crisis,” said Anamaria Lucardi, an economist at George Washington University. “They are highly leveraged; They are carrying high value loans. They are being approached by debt collectors. They are not going to enjoy their golden years. “
Dr. Mudrajija and her co-author, Barbara Boutrica, a senior fellow at the institute, used data from the National Health and Retirement Study and calculated that in 1998, about 43 percent of Americans over the age of 55 had debt, averaging $ 40,145. By 2016, about 57 percent had debt and more: an average of, 62,784, adjusted for inflation.
The proportion in which debt represents 30 per cent of their total assets has risen to about 45 per cent, and the ratio of debt to assets, which had reached an alarming 80 per cent, has almost doubled to 15 per cent.
According to a study published by the Boston College Center for Retirement Research, older people with a loan are more likely to have health problems, but the type of loan is more important.
Secured loans, such as mortgages and other home loans, are backed by an asset: housing. This type of borrowing has increased among older borrowers due to rising real estate prices and lower interest rates. “Paying people mortgages before they retire is an increasingly less ideal, traditional model,” Dr. Mudrajija said.
But secured loans seem to be less harmful to health than unsecured loans like credit card balances, student loans and overdue medical payments, which usually lead to higher interest rates. In 1998, about 24 percent of adult adults had unsecured loans; By 2016, the proportion had risen to 35 percent.