March 11, 2016

Debt Increases among Older Americans

According to a February 12, 2016 report by the Federal Reserve Bank of New York, debt among older Americans more than doubled between 2003 and 2015.  Specifically, the report states that Americans age 50 to 80 have seen a 59% increase in debt during this period.  According to the report, this increase is true for almost all types of debts, including mortgages, home equity lines of credit, credit cards, and auto loans.
While some of this increase may be attributed to the aging of the population, the report indicates that other factors are at play given the fact that since 2003 per capita debt increased by 48% at age 65 but saw a 12% drop at age 30.  The report attributes some of the changes in the per capita debt to changes in lender and borrower behaviors, such as:
·         new loan originators increasingly favoring older borrowers;
·         auto and mortgage originators tilting away from younger borrowers;
·         the direct correlation between credit risk score and age;
·         student loan debt affecting younger borrowers’ ability or willingness  to originate new loans; and
·         retirement-aged consumers’ strong repayment history.

The report indicates that even as the balance of their debt increases, retirement-aged consumers’ continue to show strong repayment history.

Read the full report here: