Baby boomers were once well known for enjoying a significantly wider savings gap than those from prior generations. However, a growing trend shows a significant increase in debts for the 75 million boomers close to or at retirement age.
According to an analysis of federal data conducted by the Employee Benefit Research Institute, U.S. residents from 65 to 74 years old hold are burdened with five times the borrowing obligations than Americans their age had two decades ago.
While debt levels have traditionally peaked for people in their 40s, the Federal Reserve reported that debt held by borrowers between 50 and 80 years old increased approximately 60% between 2003 and 2015. In that same span of time, debt among younger borrows declined.
Older Americans now have more credit-card debt than younger people for the first time, a reversal from the past, according to the AARP Public Policy Institute. In addition, the amount of student loans held by people 65 and older is outpacing the general population, according to the Government Accountability Office.
For some baby boomers, debts increased because they started families later in life. Having children at an older age delayed college tuition costs during a time when their careers and income were winding down.
The chances of ever paying it back challenges according to federal data analyzed by The Economic Policy Institute. The think tank found that median savings for U.S. households nearest retirement age dropped to $14,500, a 32 percent reduction over the past decade.
The financial crisis of 2008 played a role in the increase in credit card and medical debts for people closing in on retirement. That “Great Recession” saw salary reductions or outright loss of jobs while home values dropped precipitously.
Solutions exist to secure a growingly unsecure nest egg. Seniors who work past typical retirement age can earn more wages that result in more disposable income. Yet, the current debt levels combined with another possible recession or drop in home values could mean bankruptcy filings in their golden years.