The Changing Face of Debt and Financial Fragility at Older Ages

Lusardi, Annamaria; Mitchell, Olivia S.; Oggero, Noemi

doi:10.1257/pandp.20181117

Cited by 55 publications

(45 citation statements)

References 13 publications

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“…Unfortunately, studies find that older Americans have become increasingly more leveraged over time. Lusardi et al (2018) find that the mean debt-toasset ratio among adults ages 56-61 rose from 45 percent for the oldest birth cohort to 104 percent for the youngest cohort, and even the median debt ratio grew from 4 percent to 15 percent between birth cohorts. Butrica and Karamcheva (2018) find that the mean debt-to-asset ratio among adults age 62-69 increased from 10 percent in 1998 to 23 percent in 2014.…”

Section: Introductionmentioning

confidence: 85%

“…Debt at older ages. Recent studies have documented the rise in debt among older Americans (Brown et al 2019;Butrica andKaramcheva 2013, 2018;Butrica and Mudrazija 2016;GAO 2014; Joint Center for Housing Studies of Harvard University 2014; Masnick et al 2006;Karamcheva 2013;Lusardi et al 2018;Munnell et al 2016;Smith et al 2010). Not only are older adults more likely to carry debt, but their level of indebtedness has increased substantially over time.…”

Section: Introductionmentioning

confidence: 99%

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Is Rising Household Debt Affecting Retirement Decisions?

Butrica

Karamcheva

2019

SSRN Journal

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Household debt among older Americans approaching retirement has increased dramatically over the past couple of decades. Older households have become increasingly more indebted and more leveraged. While mortgages remain the predominant type of debt among households in their 50s and 60s, in recent years, student loan debt has also risen among these households. Using household survey data to examine how late life debt affects retirement decisions, we find that more indebted older adults are more likely to work, less likely to be retired, and on average expect to work longer than those with less debt. AbstractHousehold debt among older Americans approaching retirement has increased dramatically over the past couple of decades. Older households have become increasingly more indebted and more leveraged. While mortgages remain the predominant type of debt among households in their 50s and 60s, in recent years, student loan debt has also risen among these households. Using household survey data to examine how late life debt affects retirement decisions, we find that more indebted older adults are more likely to work, less likely to be retired, and on average expect to work longer than those with less debt.

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Section: Introductionmentioning

confidence: 85%

Section: Introductionmentioning

confidence: 99%

Is Rising Household Debt Affecting Retirement Decisions?

Butrica

Karamcheva

2019

SSRN Journal

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“…Research on financial vulnerability has turned increasingly toward discovering the impact of economic shocks on financial stability, with specific emphasis on the importance of emergency savings (Chase, Gjertson, & Collins, ; Gjertson, ; Lusardi, ; McKernan et al, ; Mills & Amick ). Characterized as a lack of liquid assets equal to three months of income, or the inability to come up with $2,000 in 30 days, financial fragility is estimated to impact 39 to 46 percent of all U.S. households (Brooks et al, ; FINRA Investor Education Foundation, ; Lusardi et al, ).…”

Section: Literature Reviewmentioning

confidence: 99%

A Population on the Brink: American Renters, Emergency Savings, and Financial Fragility

West

Mottola

2016

Poverty &Amp; Public Policy

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Financial fragility and inadequate emergency savings are commonly associated with lower educational attainment, lower household income, younger age, minority status, and lower rates of financial knowledge and financial literacy. Using the 2012 National Financial Capability Study (N = 25,509), the purpose of this research was to determine if renters, compared to homeowners, were more likely to report financial fragility or inadequate emergency savings. Results of logistic regressions suggest that renters were 75 percent more likely to experience financial fragility and 93 percent more likely to lack adequate emergency savings than homeowners. Considered in tandem with other research on the outcomes of financial fragility, these findings suggest that renters, if confronted with an income or expenditure shock, may not be able to draw upon existing resources and may be at risk for housing instability.

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“…For some, managing mortgages is difficult and/or they are under water: 10 percent of those with mortgages have been late with mortgage payments at least once in the previous year, and 9 percent of those with mortgages or equity loans reported owing more on their homes than they believe they could sell them for. In Lusardi et al (2018) we showed that those nearing retirement today hold higher mortgage debt than did previous generations.…”

Section: Assessing Near-retirees' Borrowing Behaviorsmentioning

confidence: 82%

Debt Close to Retirement and Its Implications for Retirement Well-being

2019

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We analyze debt and debt management of Americans nearing retirement age, to document that older people have numerous financial obligations that can lead to financial distress. Using data from the 2015 National Financial Capability Study and drawing on an extensive literature review, we show that lack of financial literacy, lack of information, and behavioral biases help explain the prevalence of debt later in life. Our evidence indicates that debt at older ages can negatively influence retirement well-being.

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The Changing Face of Debt and Financial Fragility at Older Ages

Cited by 55 publications

References 13 publications

Is Rising Household Debt Affecting Retirement Decisions?

Is Rising Household Debt Affecting Retirement Decisions?

A Population on the Brink: American Renters, Emergency Savings, and Financial Fragility

Debt Close to Retirement and Its Implications for Retirement Well-being

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