Debt over age 50 is on the rise

Debt is increasingly a problem for older Americans, a report issued this week suggests.

The median level of debt for people over age 50 has tripled over the past 30 years, fueled in part by student loans and mortgages, according to a recent analysis by the Government Accountability Office.

The GAO, which issued a report released the public on Monday, found that the median debt for households with people over age 50 was more than $55,000 in 2016, up from less than $19,000 in 1989, adjusted for inflation. More people in that group are also in debt, with 71% of households carrying debt in 2016 compared with 58% in 1989, the government watchdog reported.

The group, which investigates a variety of topics at the request of Congress, also found that the ratio of debt to assets peaked at about 22% in 2013. It fell to just over 20% in 2016, but that is nonetheless up from only 10% in 1989.

More concerning is the trend in debt among lower-income households whose members are over 50. For people ages 75 to 85, those in the bottom income quartile had more than twice the debt-to-assets ratio as those in the top quartile, according to the GAO. Further, the investigator found big disparities by race, with Black and Latino families carrying about twice the debt-to-assets ratio as white households.

Behind the trends are increases in health care expenses and credit card and student-loan debt. There has also been an uptick in mortgage debt, although owning a home can have the effect of boosting retirement security, the GAO noted.

“Most of the experts we interviewed noted health shocks, or unpredictable illnesses that diminish health status, could leave those with debt particularly vulnerable,” the group stated in its report. “For example, some experts noted that older individuals may plan to work longer so they can pay off their debt, especially mortgage debt, but as people age, health generally deteriorates, and major health events could derail debt repayment.”

There also appear to be generational differences in how people view debt, which could be responsible for some of the increases, particularly in mortgage debt, according to the GAO.

“[S]ome experts noted that each successive generation is carrying more debt than the one that preceded it. In particular, most experts described the trend of carrying mortgages at older ages,” the report noted. “[T]his increasing debt could make older Americans more financially fragile in general and more vulnerable to increases in interest rates, housing price fluctuations or unemployment.”

How that will affect retirement security for groups like millennials is unclear. That generation, for example, has lower net worth than prior generations did at the same ages, while also carrying much higher student loan debt. But retirement is distant for most of them, and how that dynamic will play out is uncertain, the GAO noted.

A higher percentage of people 50 to 79 also became delinquent on debt payments by more than 90 days, according to the report. In particular, there was a rise among those behind on car payments, from just over 1% in 2003 to about 3% in 2019. About 5% of people in that age group were behind on other debt, excluding home equity loans and credit-card debt, in 2019, up just slightly from the figure in 2013, but down from a high of nearly 8% in 2011.

Among people whose credit scores were under 720, student loan debt doubled between 2003 and 2019, the report found. About half of all households ages 50 to 64 reported having some student loan debt in 2016, and that figure was more than 65% for households over 65.

The GAO delivered its report to Congress in April but just recently released it to the public. The report is based on an analysis of data from the Federal Reserve's Survey of Consumer Finances.