America's seniors are becoming more likely to increase their debt—and saw the biggest percentage jump in borrowing relative to other groups over the past decade.
The median level of debt among households led by someone 65 and older—the level at which 50% are above and below—rose nearly 120% between 2000 and 2011 from roughly $12,000 to $26,000, due largely to rising mortgage debt, according to a Census report released Thursday.
The report raises concerns about the financial health of older Americans at a time when many are worried they lack the savings and investments to retire comfortably. The recession damaged many seniors' nest eggs and fewer Americans are saving as much for retirement. The Federal Reserve's strategy for spurring the economy—low interest rates—has the impact of reducing returns for seniors on safer investments.
Older households "are less likely to own their homes free and clear than was once the case," said Richard Fry, an economist at the Pew Research Center. Increased homeownership by seniors explains some of the increased debt, but older Americans have also ramped up use of "home-equity" loans, where consumers borrow against the equity in their homes, he said.
Granted, older Americans tend to be wealthier and survived the housing crash in relatively better shape than younger households. Younger people also owe more relative to their incomes than older people. And seniors are also working more, making paying off debt easier.
Still, the new figures show seniors have grown more likely to be in debt, even as other groups pare back. People 65 and older were more likely, for example, to have a mortgage in 2011 compared to 2000, while people under 55 were less likely to have a mortgage—or any debt, the Census said.
Those 65 and older saw their typical "secured debt," largely mortgages, rise from around $25,000 to $50,000. Seniors started taking on more "secured" debt early in the 2000s, ramped up dramatically between 2005 and 2009—and then eased off borrowing around the end of the decade, Census data show.
The rising debt load also comes as seniors' wealth has fallen due to the recession. The median net worth of American households—the value of assets like homes and stocks, minus debts—was around $69,000 in 2011 compared with $82,000 in 2000 and $107,000 in 2005. In a report last year, the Fed also noted a "marked increase" in debt among older families.
The burden of more debt isn't limited to just seniors. People ages 55 to 64 saw their typical or median household debt rise 64% to $70,000. Younger people, meanwhile, are borrowing more to pay for college, even as they cut credit-card use. Those under 35 saw their typical debt rise 13%. Overall, the typical U.S. household's debt rose 37% between 2000 and 2011 to $70,000.
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