Debt of the Elderly and Near Elderly, 1992-2004

September 2006, Vol. 27, No. 9
Paperback, 16 pp.
PDF, 774 kb
Employee Benefit Research Institute, 2006

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Executive Summary

• Elderly debt levels rising—Families near or in retirement are getting more in debt:


    --> The percentage of American families with heads age 55 or older that had debt increased from 1992–2004, reaching 61 percent, almost 5 percentage points higher than in 2001.


    --> The average total debt level also rose, from $29,309 in 1992 to $51,791 in 2004. The median debt level (half above, half below) of those with debt rose from $14,498 to $32,000. This represented a real increase in average and median debt levels of about 77 and 121 percent, respectively, from 1992.


• Oldest elderly incurred sharply higher debt—Families with a head age 75 or older with debt increased substantially in 2004, to 40.3 percent from 29.0 percent in 2001. The increase in the 75 or older group accounted for most of the overall increase in incidence of debt among families with a head age 55 or older.


   --> The average debt with a family head age 75 or older rose to $20,234 in 2004 from $7,769 in 1992, up 160 percent.


   --> The median debt (half above, half below) rose to $14,800 in 2004 from $4,218 in 1992, up more than 250 percent.


• Housing debt a big factor—Families with a head age 55 or older with housing debt increased steadily, from 24 percent in 1992 to 36 percent in 2004. This was due mainly to homeowners refinancing their mortgages, cashing out equity in their home, or facing rapidly increasing home values during 2001–2004 when buying a home. The largest increases in debt were among families with the oldest (age 75 or older) heads, but this group’s growth in debt was from both housing and non-housing debt.


• Debt growing fastest among the poor—Debt increases with a family’s income, although debt is growing fastest among lower-income families. In 2004, 47 percent of families in the lowest income quartile were in debt, compared with 75 percent of those in the top income quartile. Families in the lowest income quartiles had the largest percentage point increases in debt from 2001 to 2004 (from 38 percent to 47 percent).


• Implications—The changing nature and level of family debt has obvious implications for the future retirement security of many Americans, chiefly that more families have at risk their most important asset—their home.