Retirement & Financial Planning Report

Households near retirement and in the early years of it are more likely to have debt, and to have more of it, than in the recent past, a study by the Employee Benefits Research Institute found.

“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,” it said.


“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,” it said.

The study examined those in three age groups–50-64, 65-74 and 75 and above—in 2016 vs. 1992. In the former group, for example, the average total debt rose from $80,000 to $10,000 in that time and among the middle group both the share of households having debt and the amount of debt increased; however, among the oldest group both the percentage with debt and the average debt stayed about the same.

Other findings include that:

* “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.”

* “Married households had a higher probability than single households of having debt but were less leveraged.”

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