|
 |
|
|
Increasing Debt Dogs Older Americans |
| |
Older Americans, especially those near or in retirement, are facing increasing levels of debt, a new report by the Employee Benefit Research Institute says. The growth in debt among families in the 55-64 age range is especially troubling, having increased almost 119 percent since 1992, EBRI said.
The study was based on the Federal Reserve Board's triennial Survey of Consumer Finances. The latest survey contains data through 2007. The percent of families in debt and headed by someone age 55 or older increased to 63 percent, a 10 percentage point gain since the Fed's 1992 survey.
Average debt soars
The average debt level of older families increased to $70,370 in 2007 from $32,191 in 1992.
Although that increase includes inflation over that period, the amount of debt compared to an average older family's assets increased to its highest recorded level. That indicates the real levels of debt for older families have increased.
The average level of debt to assets was 7 percent in 1992 but declined to 6 percent by 2001. Since then it has increased to a record 7.4 percent of assets. Credit card debt increased on an inflation-adjusted basis by 36 percent for families headed by those age 55 to 64. The average family in that range carried $3,000 in debt in 2007.
Housing debt made up the largest portion of debt and it, too, increased. Families headed by those age 65 to 74 saw their housing debt increase to $69,000 from$56,013 in 2004. Younger families saw a small decline in housing debt over that period, but more families had housing debt than three years earlier.
Bad housing debt
The Institute said rising debt levels are not necessarily bad for all elderly families, but rising housing debt is a concern "since housing typically is the major asset elderly families have."
"Leveraging it at this point in their lives may leave them with-out a major resource to finance an adequate retirement, given the recent down-turn in the housing market," it adds.
Institute researcher Craig Copeland wrote that the picture may look worse today, since the data comes from 2007, before the economic downturn of 2008. Debt levels may be even worse now, he wrote.
©OSB Financial Services, INC rights reserves.Information has been obtained form sources believed to be reliable, but its accuracy and completeness and the options based thereon, are not guaranteed. Always consult your a financial adviser and prospectus before making an investment
©2009, Kelly Ruggles Web site
Kelly C. Ruggles is a fee-based financial planner located in Spokane.
Kelly C. Ruggles, President of American Reliance Group, Inc., a registered investment advisor.
Kelly Ruggles is the author of "The Financial Playbook" for Retirement
Kelly C. Ruggles does not intend to provide personalized investment advice through this publication and does not represent the strategies or services discussed are suitable for any investor. Investors should consult with their financial advisors prior to making any investment decisions
|
|
|
|
