Study: Perilous Debt Levels Put Half of Elderly Households at Risk
New research from the Employee Benefit Research Institute shows that the percentage of households headed by someone 75 and older carrying debt in retirement grew by 60 percent over the past decade from 31.2 percent of households to 49.8 percent.
Another troubling statistic contained in the report, Debt of the Elderly and Near Elderly, 1992–2016, is that 75+ households with debt payments exceeding 40 percent of annual income increased by 25 percent over the same period.
“The percentage of the oldest families whose debt payments are excessive relative to their incomes is near its highest levels since 1992,” according to the study’s author Craig Copeland, Ph.D. “Consequently, more families that have elderly heads are placing themselves at risk of running short of money in retirement due to their increased likelihood of holding debt while in retirement.”
Housing debt has been driving the trend of increased debt in the last decade. The amount of money people are borrowing for first and even second mortgages seems to be where people are getting into trouble, Copeland told Forbes.com writer Ashlea Ebeling, in her article The New Reason to Pay Off Your Mortgage Now.
Our take here at Gofinancial is a simple — get a HECM mortgage which uses home equity without payments for the rest of your life. Scale down your debt while you can. See information on Information tab on the home page for details.
Consider reading How large is your mortgage “bite” in the household “apple” on this page about mortgage debt in retirement. See http://gofinancial.net/2016/12/payments/