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Why boomer debt has soared

A new Census Bureau report also shows a sharp increase in the debt load among older retirees -- at a time when they should optimally be debt-free.

By MSN Money Partner Mar 21, 2013 4:16PM

This post comes from Matthew Heimer at partner site MarketWatch.


MarketWatch logoThe Census Bureau released a new study today that measures changes in U.S. household debt between 2000 and 2011, and the numbers offer some insight into the financial pressures that baby boomers face as they transition into retirement.


Image: Mature couple calculating expenses © Abel Mitja Varela, the Agency Collection, Getty ImagesAmong the potentially discomfiting figures in the report: Average household debt for people age 55 and over increased faster than for any other age group, and the 65-and-over group was the only category in which the percentage of people holding debt has increased since 2000.


The report identifies some broader trends about the debt that Americans are juggling. Overall, fewer households carried debt in 2011 (69%) than in 2000 (74%).


We're much less likely to hold credit card debt than we used to be: The percentage of households carrying a balance fell from 51% in 2000 to 38% in 2011. On the other hand, what the Census Bureau labels as "other unsecured debt," a category that includes medical bills and student loans, is up sharply, with 19% of households now holding it, up from 11% in 2000.


That unsecured debt is a big burden for younger households -- particularly student debt, which has raced ahead far faster than wages and salaries have.


Medical debt grows for retirees

The medical elements of that category, meanwhile, are part of what's weighing down retirees. The median amount of "other debt" held by people over 65 has more than doubled since 2000, to $4,000 today.


Overall, 44% of 65-plus households hold at least some debt, and their median household debt is  $26,000 -- also more than double the 2000 level in inflation-adjusted dollars.

The biggest debt factor for most households, including those older ones, remains mortgages and home-equity debt, which accounts for about 78% of all household debt. In part as a legacy of the price inflation and overspending that came with the real-estate bubble, Americans are now much more likely than they used to be to carry mortgage debt when they retire.


That's undoubtedly part of the burden for those baby boomers in the age 55-to-64 category: The median household debt in that age group is $70,000, up 64% from 2000.


Of course, those younger boomers are also juggling medical bills and, often, student debt and other expenses they've shouldered for their kids. The data shows a boom there, too: The "other debt" burden for 55- to 64-year-olds reached $8,688 in 2011, more than triple the level from 2000.


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Mar 21, 2013 9:48PM

Why is this so hard to understand. Retirees who planned well and responsibly and voluntarily retired had a very common plan. Move their assets to a low risk enviroment assuming a 3% return which had been the average for decades. Budget distributions and add Social Security. But the Fed in its' wisdom has decided to penalize savers to push people into a risky market, further enrich the thieves on Wall Street and screw the old folks. Yes, it is that simple. Many of those retirees have that $70,000 debt load because that is about the interest they would have earned in the years that Bernanke has screwed with interest rates and accomplished nothing by it.


Now, to top it off, the politicians want to label SS and Medicare recipients deadbeats.


A Christian country my ****. One of the most ignored commandments is "Honor thy father and thy mother".

Mar 21, 2013 5:46PM
Very few people will ever be debt free under our current form of government.  By "form" it is intended to mean a congress who cannot add and subtract and a congress who pays other countries to not come over and beat us up.  They call it "aid" but it is like a wimp paying a bully to not beat him up.  Our government does a lot of talk but the US hasn't won a war since WWII and likey would have lost that had the mighty Japanese known we didn't have another bomb.  We could have won Vietnam had the military personnel not been held back by the shaking in their boots of the idiots in Washington.  Why spend money on any way if the personnel are going to be held back?  We will never get ahead when our government can't balance a checkbook.  Not one of them is worth their pay.
Mar 21, 2013 7:33PM
The sooner everyone realizes that it isn't worth 'keeping up with the Joneses', the better off (and debt-free) they'll be....
Mar 21, 2013 10:49PM
Seems like people are quick to lump everyone into groups. I'm a boomer, about a year from retirement, and have no money problems at all. Worked hard, saved as much as possible.

 No debt, never had a mortgage as I built my house myself over years with cash.  Always lived well below my means, saved for the rainy day as my depression era parents taught me. I know many boomers that also were very responsible and saved for their retirements as well. 

 I also work with many 20 & 30 year olds that are likewise doing well. They chose difficult majors in college that got them good paying jobs. They work 18 hr days beside me when needed and have learned to do what it takes to get the job done. Many are also saving a good deal of their money.

 My take is that most people have the opportunity to do well, just many don't want to put in the effort. My experience is that it isn't related to age, it is mindset and determination. I've watched many poor kids go to college, study the sciences, and end up in great paying jobs. They weren't too proud to do any menial job along the way to keep on track. 

People always want to blame someone else for their "good luck. "  My father always told me that you make your own luck with hard work. And then, people won't want to give you credit for your accomplishment because they'd have to admit they also could have achieved it if they had been willing to put in the long hours and sacrifices to make it. Every generation has successful people because they seek it out. Every generation has disappointed people because they just expected good things to come easily. That's life.


Mar 21, 2013 9:43PM
In my town, all the new neighborhoods are full of McMansions with cars parked outside because the garage is full of junk.... Any more questions as to where the debt came from?
Mar 21, 2013 8:09PM
Why has boomer debt soared?  Because the boomer generation, on the whole, is the first generation to consistently live beyond their means.
Mar 21, 2013 9:10PM
Well, at least the Boomers will get their full social security.  Gen X is hosed!  Lower median wages to boot!
Mar 21, 2013 8:22PM
avoid's like paying a blood sucker for nothing....esp. when secure savings are paying .5%....debt has destroyed our people,our country,our economy, and our culture
Mar 22, 2013 8:49AM

I'll have my house paid off next year. I'm 34, a single parent, and make less than $50,000 a year.  I've already paid off more than $110,000 in debt over the last 5 years, and I put 15% into retirement.

I live well below my means, and make sure my family is taken care of first.

if you're willing to say NO once in a while you can get ahead, and stay ahead

Mar 21, 2013 10:20PM
There is a difference between being honest and being deluded.  Viet Nam was unwinnable as proven by the French much like Afghanistan is unwinnable as proven by the Russians and so many other countries over the years. Congress is made up of panderers whose positions are determined by who makes campaign contributions and those who will vote for them if they tow the line. Our last chance was probably 1964 when we had control of Congress and  close to a mandate for term limits and the GOP leaders decided that they were no longer needed since Republicans were in charge.As one of our native philosophers once said, "We have met the enemy and he is us". 
Mar 21, 2013 8:09PM
home-equity debt... who would borrow against their home??
Mar 21, 2013 7:37PM
Debt allows you to buy things you couldn't otherwise own.  If a person can cover the payments and continue to live comfortably, then what does it matter?  Maybe it increases demand and drives cost up for everyone else but who cares about everyone else?    I'm debt free and I've been that way for that past 12 years.  I'm gong to stay that way too!  It's a lifestyle.  I like not having to get up and go to work anymore!  I'm looking forward to collecting social security when I reach 62! 
Mar 22, 2013 5:49AM
I admit!!!! I fell into u have to have more then the Jone's. I bought a 3200sqft home in 2000 for 389,000 in Maine morg 2700mth electric 350-400mth oil 5mth at 1000.mth ect. had a 45ft boat 3 car's ect. yes we both had good paying jobs then we got a divorce she wanted the house ect. I said take it please!!! I then bought a 1200sqft 139,000 house morg 450mth yes I put hafe down ectric 170mth oil one tank per winter 800.00 yes based on oil price. Now her house is worth 220-230,000 mine is worth about 160,000 sold the boat replaced it 28ft have a 2007 car paid for no credit card debt had 12k when married. I just turned 50, and can retire next year, and travel fish ect. Every time I drive by one of these Mac house's with a new MB BMW ect. I laugh! Yes there are people that can afford them, but if you looked most can't. Like I said I feel into the same trap as many many people did and not saying im was any smarter!!! just shearing my story.
Mar 21, 2013 6:32PM
I plan to carry debt into retirement as I have taken advantage of historically low rates.  Of course I could just pay it off, but why bother when I can get a higher return in investments than I can in debt repayment.  It all depends on the debt and your reason for carrying it.  Those who have assets are different than those who only have debt.
Mar 22, 2013 8:09AM
Other than my house I never carried any debt since 1976.  Paid my house off 15 years early.  Retired in 2002 and am now quite happy and enjoying life.  Travel and have fun.  No worries.

Too bad many people thought they'd have a job forever and that inflation would some how save them.

Overspend, live beyond your means, run up debt and your retirement will probably suck.

Too bad schools don't teach simple economics to our young kids.  Hope they learn from others mistakes.

Mar 21, 2013 10:39PM
Boomers were lucky and had great economic times/ wages.   Of recent times, many lost money on the value of their homes that were their built-in nest egg. 
Mar 22, 2013 4:59AM
How about an article showing baby boomers how to get out of debt?  We already know why we are in debt.
Mar 22, 2013 9:57AM

The 3 most important things you must do when gettig ready to retire are: 1.  Pay off your house. 2. Pay off your house, and 3. You really must pay off your house. You will sleep a lot better.

Mar 21, 2013 8:15PM
Except for very specific situations, debt cannot be transferred upon death, so it's in the interests of baby boomers to stay in debt up to the point of death. it's really the only way to screw "The Man". 
Government policies are largely responsible for the debt loads the average American carries. Between low interest rates and easy credit we have all been encouraged to borrow as much as possible. So we did since we are good Americans. 
Mar 22, 2013 10:24AM
People talk smart "I'm debt free"  making me better than you.       Yeah till you have a sick child, spouse, or yourself and the medical bills pile into your mail box.    Or the job you had is gone and nobody will hire you because you are to "old".    Don't judge till you've walked in another mans shoes.
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