Friday, September 9, 2011

Debt in Retirement

We've talked a lot about the fact that many Americans have had to postpone their retirements, or at least keep working part-time at an age when they hoped to have put their careers behind them. An article in the Wall Street Journal this week pinpointed perhaps the biggest reason for this: debt. Households headed by folks aged 62 to 69 held an average of $71,000 in mortgage debt in 2007, a whopping five times higher than the inflation-adjusted amount from 20 years earlier.

Mortgage debt of all kinds is on the rise for older people. In 1994, 22 percent of homes headed by people aged 60 through 64 still had primary mortgage debt; now that number is up to 39 percent. The figures for secondary mortgages have risen from 12 percent in 1994 to 20 percent today.

Home mortgages aren't the only type of debt affecting older Americans. According to TIAA-CREF, which runs many types of retirement funds, loans taken out against retirement accounts rose by 18.8 percent in the past year alone. That's going to make a comfortable retirement awfully tough.

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