According to new data, U.S. consumers aged 60 or older are accumulating debt faster than any other age group, and the demographic is close to 40% more likely to hold debt than they were in 1989.
Most people in their 60’s are retired and don’t receive a paycheck, yet they are reportedly as likely to have debt as those in their 20’s, according to the Federal Reserve. In 1989, a household “headed by a 60-something” had about $19,000 worth of debt. By 2014, debt for those in their 60’s was around $93,000 — a 380% rise.
People in their 20’s increased their debt over the same 25-year period, but not by nearly as great a margin, going from about $33,000 to $41,000.
According to the report, households headed by a person over 60 years old paid more than 5 times the amount paid by millennials — shelling out an estimated $25 billion worth of debt payments in 2013, on income they likely receive from Social Security and retirement accounts.
When all tallied up, senior citizens now account for nearly a quarter of all US debt payments.
The debt may be affecting the seniors’ retirement, as debt payments average $900 a month, according to federal data, leaving many with little finances left to enjoy life.
One reason for the high debt percentages, however, may stem from the fact that seniors are more often choosing to age in place, keeping their mortgages and obtaining services that help them do so. The in-home care services may save money in the long-term on the cost of healthcare.
Debt is also helpful as a backup, according to the report, as readily available credit can smooth unexpected costs over the long term, since it can be much cheaper to manage credit card debt than to take out a big lump sum from a retirement savings account.
Debt management strategies are one way for consumers to reduce their debt, the report says. A good financial strategy can help people retire without little to no debt, and an advisor can help consumers decide between good and bad debt.
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