EBRI Issue Brief

The Impact of Rising Household Debt Among Older Americans

Mar 12, 2020 22  pages


As older households transition into retirement, their labor income, as well as their ability to accumulate more income-producing assets, declines and they will need to primarily live off their retirement plans and Social Security income. Carrying debt through retirement affects retirees’ financial security as they have more expenses to cover with limited resources. As such, having debt at older ages can affect the timing of retirement and Social Security claiming. This in particular is important as Baby Boomers continue to enter retirement in large numbers and, according to many studies, are known not to be well prepared financially for retirement.

To explore the phenomenon of debt in retirement, the Employee Benefit Research Institute (EBRI) uses the Health and Retirement Study (HRS) to examine the debt status of older Americans preretirement and postretirement between 1992 and 2016, biennially. Three groups are examined between 2008 and 2016: pre-retirees (ages 50–64), early retirees (ages 65–74), and late retirees (ages 75 and older). Key findings are:

  • The three age groups show very different trends in terms of whether debt is present and the debt levels undertaken.
    • Among those ages 50–64, the average (and median) total debt sharply increased from $80k in 1992 to $120k in 2016 with a peak of $140k in 2010.
    • Among those ages 65–74, both the share of households having debt and the amount of debt increased over the period. The percentage of those with debt increased from 47 percent to 57 percent between 1998 and 2016. Meanwhile, the average and median amounts of debt had an upward trend that peaked in 2010 and slightly decreased afterward.
    • Among those ages 75 and older, the percentage of those having debt as well as average and median debt stayed relatively the same during this period.
  • Older households in all age groups have become more leveraged[i] between 1992 and 2016. For instance, the average total debt-to-total-net-wealth ratio of those ages 50–64 increased from 16 percent in 1992 to 27 percent in 2016.
  • Married households had a higher probability than single households of having debt but were less leveraged. Further, single female households were more likely to have debt than single male households and had the highest median debt-to-net-wealth ratio at ages 54–62.
  • Households with debt worked longer than those without debt, and highly leveraged households were more likely to work compared with those with lower debt-to-net-wealth ratios.
  • Providing financial support to children and grandchildren increased the likelihood of having debt for parents at older ages.