Growing Older and Deeper in Debt

Jennifer Bayot of the New York Times reports on the growing debt burden of the elderly in the United States:

• "One in four families headed by someone 65 or older still had a mortgage to pay in 2001, the most recent data available. In 1989, just one in six still had house payments to make."


• "As a group, people over 65 have the distinction of having not only the fastest-growing home debt, but also the fastest-growing share of personal bankruptcy filings and the biggest growth in demand for credit counseling."


• "Mortgage debt owed by older households nearly quadrupled between 1989 and 2001, even after accounting for inflation, according to an analysis of Federal Reserve data by Zhu Xiao Di, a research analyst at the Harvard Joint Center for Housing Studies. In 2001, the typical household headed by someone 65 or older had $44,000 in mortgage debt, compared with $12,000 in 1989, Mr. Zhu says in a forthcoming paper. The mortgage debts of younger homeowners, though still considerably larger at $75,000 on average, grew barely a fifth as quickly."


• "While home loans are usually their biggest payment, the elderly have been rapidly accumulating other debt as well. Credit card bills -- to cover everything from minor emergencies to ongoing essentials -- have risen sharply. All told, the debt burdens of borrowers between the ages of 65 and 74 doubled between 1992 and 2001, compared with an increase of 83 percent for the general population, the Federal Reserve says."


• "More and more of the elderly are in outright financial distress. One in seven households headed by someone 65 or older was considered heavily indebted in 2001 - devoting at least 40 percent of their incomes to debt payments, according to the Federal Reserve's Survey of Consumer Finances. That compared with one in 10 among all households with debt."


• From 1997 to 2001, bankruptcies among the elderly tripled to 82,000, says the Consumer Bankruptcy Project, a consortium of university researchers. The number of people 65 or older grew only 3 percent during that time. (Jennifer Bayot, "As Bills Mount, Debts on Homes Rise for Elderly," New York Times, July 3, 2004)

This at a time when the shirt from defined-benefit to defined-contribution pension plans has diminished the net worth of the median older household ("401(k) Boondoggle," June 14, 2004). . . .