Thursday, December 12, 2013

Working Paper: Older Adult Debt & Financial Frailty

From the University of Michigan Retirement Research Center, a paper on "Older Adult Debt and Financial Frailty" by  Annamaria Lusardi (George Washington Univ. of Business) and Olivia Mitchell (Wharton, Univ. of Penn.).  The authors compare data from three different time periods to analyze older persons' debt, debt management practices and corresponding potential for financial insecurity.  Key findings include:

  • Older Americans now on the verge of retirement are more likely to have substantial debt than in the past.  "Median debt for those age 56-61 has more than quadrupled, from about $6,200 in 1992 to $28,300 in 2008 (in 2012 dollars)."
  • Housing purchased with small down payments and subject to large mortgages are key reasons for higher debt for Boomer retirees.
  • Income, level of education, marriage status, race, number of children, health, were also factors identified as affecting risk of financial insecurity after retirement. 

One sentence that particularly stood out: "Baby Boomers are more likely to have engaged in expensive borrowing practices." 

http://lawprofessors.typepad.com/elder_law/2013/12/working-paper-older-adult-debt-financial-frailty.html

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