Getting older going into debt a UK and US problem

In March 2009 I wrote that in the UK borrowers approaching retirement owe four times as much as 10 years ago. I just read another report, this one from the US, titled “Debt of the Elderly and Near Elderly, 1992–2007” from the Employee Benefit Research Instiute. This paints an equally horrible picture of what is happening to the debt profile of older
people.

The headlines from the report say

Debt levels rising: Debt levels of those in or near retirement age are heading up: Among elderly families—and especially among the lower-income elderly—both housing debt and consumer debt levels are rising. For some cohorts, a substantial percentage have debt levels well beyond the threshold considered problematic.

Percentage with debt: A growing share of older American families had incurred debt through 2007, particularly those ages 55–64—the ages right before or at the start of retirement.

Debt levels: As the percentage of families with a head age 55 or older with any debt increased from 1992–2007, the average total debt level also increased: from $32,191 (2007 dollars) in 1992 to $70,370 in 2007; the median debt level (half above, half below) of those with debt increased from $15,923 to $43,000.

Rising housing debt a major concern: Although rising debt levels are not necessarily a sign of danger for all elderly or near-elderly families (especially if they are also high-income), rising housing debt is of particular concern, since housing typically is the major asset elderly families have. Leveraging it at this point in their lives may leave them without a major resource to finance an adequate retirement, given the recent downturn in the housing market.

What is terrifying about these results is that they are prior to the recession. Ahhhh. Dick Stroud