More retirement age people are carrying debt and the average amount also has risen, both disturbing developments given that it is more difficult to erase debt during retirement than during active working years.
Data from the Urban Institute show that the share of persons age 65 and older with outstanding debt began to rise even before the recession, and the inflation-adjusted value of that debt also has been growing. "Overall, individuals in or near retirement are more leveraged today than in the past," it said.
It said that in 1998, 29.9 percent of such persons had household debt, with an average amount of $13,586. But both figures rose steadily over the following years, reaching 43.4 percent and $21,165 (in inflation-adjusted dollars), respectively in 2010.
Mortgage debt was a major contributor to the increases – meaning that fewer people are paying off their mortgages before retirement, or are taking out home equity loans after having done so. The percentage of those age 65 and up with outstanding mortgage debt rose from 16.2 to 23.1 percent in that time. Meanwhile, the median per person debt—the figure at which half are above and half are below—nearly doubled to $51,000.
"These trends suggest that a growing number of older Americans will still be paying off their mortgages in retirement, potentially leaving them with less income to meet other living expenses," it said.
Household debt consumed 13 percent of their total assets in 2010, more than double the rate from 1998.
Increases in debt at older ages are "even more worrisome" the report said. Among those age 75 and up, the percentage of those with any debt rose stood at 29.6 percent, and the share of those with mortgage debt was 12.4 percent.
"The growing debt in retirement suggests that more Americans will need to devote part of their retirement income to servicing their debt, leaving fewer resources to meet daily needs. Additionally, high debt service obligations relative to income leave households more exposed to unexpected negative income shocks such as the onset of an expensive medical condition or the death of a spouse," it said.
