The Worrisome Debt Trends of Older Americans

Next Avenue reports that many older Americans are saddled with excessive debt, and the Employee Benefits Research Institute estimated that the share of families headed by people 55 and older with debt rose from 54 percent in 1998 to 68 percent in 2019 — while Clever.com said retirees doubled their debt in 2020. Mounting debt among older Americans mirrors the country's wealth and income economic bifurcation, even before considering the pandemic's exacerbation of gaps in livelihood and opportunities. Urban Institute economists Barbara Butrica and Stipica Mudrazija noted that residents of wealthier ZIP codes tend to reduce their debts as they get older, while less affluent older adults with debt undergo a substantial increase in loan values relative to their assets. Greater indebtedness is most concentrated among Americans 70 and older, while minorities and persons with low-wage careers are at the greatest risk of debt turning toxic with age. Odette Williamson at the National Consumer Law Center observes that older Americans are using credit cards to buy medications or basic staples, and those living in less-well-off neighborhoods carry debt well into retirement. Meanwhile, one in eight bankruptcy filers is 65 or older, nearly five times as many 25 years ago. Declining incomes and steep medical costs are the main bankruptcy factors. Yale University's Jacob Hacker attributes these trends to the "great risk shift," with employers and the government generally passing the financial hazards of aging to individuals.