Debt Levels Increase for Those In or Near Retirement

WASHINGTON, Oct. 8 /PRNewswire-USNewswire/ -- Debt levels of those in or near
retirement age are heading up: Among elderly families -- and especially among
the lower-income elderly -- housing debt in particular is rising, according to
a study published today by the nonpartisan Employee Benefit Research Institute
(EBRI). For some age groups, a significant percentage has debt levels beyond
the threshold considered problematic.

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, the study reports. The percentage of American families with a head
age 55 or older who have some level of debt was 63.0 percent in 2007, almost 3
percentage points higher than in 2004, 7 percentage points higher than in
2001, and up nearly 10 percentage points from 1992.

The study, in the October EBRI Notes, uses data from the Federal Reserve's
Survey of Consumer Finances to determine debt levels. It is available at
www.ebri.org

Here are some of the other points included in the study:

-- 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. This was a real increase in the
average and median debt levels of 118.6 percent and 170.0 per-cent,
respectively, from 1992.
-- Debt as a percentage of total assets: For the near elderly and
elderly
families debt as a percentage of total assets was virtually unchanged
at
approximately 7.0 percent from 1992-1998, but it decreased in 2001 to
less than 6.0 percent before increasing back to near 7 percent (at 6.8
percent) in 2004. In 2007, the percentage increased to 7.4 percent --
the highest percentage over the study period.
-- Credit card debt: The median amount owed by those having credit care
debt increased to $3,000 in 2007, up from $2,197 (2007 dollars) in
2004.
This increase was largest for families with a head age 55-64, where
the
median amount owed increased from $2,416 in 2004 to $3,600 in 2007.
The
median amount of credit card debt for families with a head age 75 or
older actually decreased, from $1,098 to $800 over the period.

-- Housing debt: The median housing debt, among those having housing
debt,
increased to $79,000 in 2007, up from $65,898 (2007 dollars) in 2004.
The largest increase was for those families with heads ages 65-74,
going
from $56,013 in 2004 to $69,000 in 2007 -- a 23 percent increase.
While
there was also an increase in the median debt of families with a head
age 75 or older with housing debt, the median amount owed declined for
families with a head age 55-64, from $91,159 in 2004 to $85,000 in
2007.
Yet, more of those ages 55-64 had housing debt.

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, the study says. 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.

"These results are troubling as far as retirement preparedness is concerned,
in that American families just reaching retirement or newly retired are more
likely to have debt -- and significantly higher levels of debt -- than past
generations," Craig Copeland, EBRI senior research associate, writes in a
conclusion to the study. "Furthermore, inasmuch as debt incidence and families
with excessive debt payments reached their highest levels in 2007 since 1992
-- i.e., before the economic downturn of 2008 -- these measures of debt have
almost certainly significantly worsened from these already-record levels.
Consequently, even more near-elderly and elderly families are likely at risk
for severe changes in lifestyle after retirement."

EBRI is a private, nonprofit research institute based in Washington, DC, that
focuses on health, savings, retirement, and economic security issues. EBRI
does not lobby and does not take policy positions. www.ebri.org

SOURCE Employee Benefit Research Institute

Craig Copeland, +1-202-775-6356, copeland@ebri.org, or Steve Blakely,
+1-202-775-6341, blakely@ebri.org, both of Employee Benefit Research
Institute