Retirement Debt Swells: Increasing Number of People Burdened Financially in “Golden Years”

Retirement Debt Growing

Retirees are increasingly ending their working careers with more retirement debt, says a new study from the National Bureau of Economic Research, revealing that America’s seniors are not finding rest in retirement, but are rather faced with bills.

Study: Retired Americans Floundering in Debt

The study examined Americans on the verge of retirement at three different points: 1992, 2004, and 2010. The study revealed that the debt-to-asset and debt-to-income ratios, as well as total debt, have been on the rise. More and more people are resorting to paying off their debt while retired, but the trend also reveals that there is a higher risk of default and bankruptcy, especially for those who are stuck in variable interest rate deals and register falling incomes. The retirement debt data also points to the numbers getting worse over time.

To supplement the study with information on seniors’ ability to adapt to financial shocks, as well as manage debt, the researchers also relied on responses to the 2012 and 2015 versions of the National Financial Capability Study.

The trend that the researchers found painted a grim picture of America’s retirees. The percentage of individuals who carried debt into retirement increases with each cohort, as did the amount of debt and the debt held by the top quartile and the top 10%.


All this points to the fact that Americans are increasingly entering retirement saddled with more debt than they have been in decades.

The median amount of debt spiked from 1992 to 2004, jumping to $31,200 from $6,800. The top quartile, meanwhile, doubled in that same time period, and almost tripled by 2010, revealing that retirement debt is ballooning rather than shrinking.

Other indicators of Americans struggling with debt in retirement, like the ratio of debt to liquid assets and the ratio of debt to total income, both increased.

Primary-residence mortgage debt similarly increased, in part because people were purchasing higher-priced homes with lower down payments. The result was that the house often represented a progressively greater percentage of total assets. Amounts of credit card debt and other non-mortgage debt, including non-collateralized debt, also rose.

The 2010 cohort showed that many more senior households were carrying non-mortgage debt equaling or exceeding their liquid assets. This suggests that these retirees missed the opportunity to reduce high-interest debt. The median ration of debt to total income, meanwhile, jumped from 14% in 1992 to 45% in 2004 and 50% in 2010.

A Generation in Debt

The overall takeaway from the study is that Americans are finding themselves further away from the finish line than they thought, reaching retirement age but still burdened by large sums of debt.

The result is that America’s older generation is struggling well beyond the working years to rid itself of financial obligations.



Indebtedness of Americans Nearing Retirement Has Risen Sharply, Increasing Risk of Bankruptcies,” The National Bureau of Economic Research, November 2017.