Retirement & Financial Planning Report

A GAO study has said found what it called a “significant” increase over several decades in the share of those age 50 and older who have debt, along with an increase in how much of that debt is considered “stressed.”

“A growing or unmanageable debt burden in older age could derail an otherwise well-planned retirement and put significant financial stress on an individual, such as from the diminishment of retirement assets or bankruptcy,” said a report done for the Senate Special Committee on Aging.


It said that 71 percent of households of persons in that age range had debt in 2016 compared with 58 percent in 1989 and that the share of debt considered to be stressed—according to measures such as the ratio of a person’s debts to assets or the ratio of debt to income—had doubled to 20 percent.

During that time, the total outstanding debt held by individuals 50 or older increased from $6.0 trillion to $6.5 trillion as measured in 2016 dollars, while the median amount of debt for those with any debt rose from about $19,000 to about $55,000.

GAO also found that the percentage of households with debt decreases with age between 50 and 75, as does the share of debt deemed to be stressed. But at any age, persons with lower incomes and those with unexpected health expenses “are likely to experience greater debt stress, which can negatively affect retirement security.”

It added that different types of debt—for example credit card vs. housing debt—have different implications for financial security.

GAO said that experts it interviewed “noted that credit card debt has negative implications for older Americans’ retirement security because credit cards often have high, variable interest rates and are not secured by any assets. In contrast, an increase in mortgage debt may have positive effects on retirement security because a home is generally a wealth-building asset.”

GAO added that “it is too early to evaluate the retirement security implications of the recession caused by the COVID-19 pandemic, in part because CARES Act provisions suspend or forbear certain debt payments. However, as with past recessions, the COVID-19-related recession may reveal any economic fragility among older Americans who, for example, lost jobs or cannot work because of the pandemic.”

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