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Key Findings Details

Older Adult Debt and Financial Frailty
Annamaria Lusardi and Olivia S. Mitchell
WP 2013-291

  • Older Americans on the verge of retirement are more likely to arrive at retirement with debt now than in the past. More than 70% of Baby Boomers held debt compared to a dozen years ago, when 64% held debt.
  • Not only are Baby Boomers more likely to hold debt, but the value of this debt has also grown sharply. Median debt for those age 56-61 has more than quadrupled, from about $6,200 in 1992, to $28,300 in 2008 (in 2012 dollars). 
  • A key reason that debt rose so rapidly for Boomers is that this group spent more on housing and took out larger mortgages, compared to earlier cohorts.
  • Higher income, better educated, and more financially literate Baby Boomers are systematically less likely to hold high levels of debt and to be financially fragile. Nonwhite, unmarried, and less healthy Baby Boomers, along with those with children, are more vulnerable.
  • Financially literate individuals are much less likely to report they are overindebted, and they are less vulnerable to shocks.
  • Baby Boomers retiring in the next several years are more likely to carry this debt into retirement, compared to previous cohorts.

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