Debt rising fast among the elderly
By Lee Russ
Monday, October 09, 2006 at 03:10 PM
Living on a fixed income is bad enough. What do you do when you're on a fixed income and have a ton of debt? It looks like we may be about to find out.A story in the Baltimore Sun details the sharp rise in debt among America's elderly:
The average inflation-adjusted debt level among elderly Americans has risen 77 percent since 1992, according to a study by the Employee Benefits Research Institute. The majority is mortgage debt. And in the hands of affluent seniors, it apparently doesn't pose a threat. But the oldest Americans, those who can least afford debt, increasingly are holding debt at dangerous levels.
"It looks like they are doing it because they are running out of money," said researcher Craig Copeland.
In the old days, before people started looking at home equity as a piggy bank, Americans tried to get rid of debt before retiring. They realized that during retirement it is difficult to handle the rising costs of everything from medical care to utilities, plus pay off debt.
But Copeland's research indicates that seniors are no longer preparing for the stress of a fixed income the way they used to.
"Families near or in retirement are getting more in debt," he said.
About 61 percent of families headed by people 55 and older are carrying debt, and the amounts are rising sharply.
Among those having debt, the median inflation-adjusted level - with half above and half below - is up 121 percent over 1992, at $32,000. The median housing debt among people 65 to 74 in 2004 was $60,000, a 42 percent increase over 2001, and credit-card debt almost doubled during that time.
Copeland drew the information from the Federal Reserve Board's Survey of Consumer Finances.
Most troubling, Copeland said, are the debt levels among the oldest retirees, apparently a partial hangover from earlier debts they could not unload.
About 29 percent of people over 75 were carrying debt in 2001, but by the end of 2004 it was up to 40.3 percent. And the amounts of debt for people well past their working years climbed to $20,234 on average, compared with $7,769 in 1992.
Housing debt was the biggest factor, primarily because people have been refinancing their homes and pulling cash out, Copeland said. They also have faced the burden of rapidly rising costs of housing.
Do you think this problem is related to the fact that so many mature adults are moving back in with their parents? Or is this a separate phenomenon that bodes cumulative ill?
But, hey, the Republicans and President Bush can't wait to make the joy of America's economy a real cornerstone of their campaign.
Dear Howard Dean and 2006 Democratic candidates: do you think this study just might be worth publicizing as the Repubs try to brag about their prowess with the economy?