Retirement Delayed to Pay the Mortgage
Older Americans who are in debt are choosing to delay their retirement, researchers conclude in a new working paper.
In earlier findings released last summer, the researchers, Barbara Butrica and Nadia Karamcheva of the Urban Institute, documented the growing prevalence of borrowing since the late 1990s among adults ages 62 through 69. Median debt levels among those who owe also surged from $19,000 to $32,100, adjusted for inflation – and debts as a share of their assets increased.
Now comes the rest of the story. When the researchers controlled for health, financial assets, home values, and other forms of wealth, as well as spouses’ earnings and other factors that play into decisions about retiring, they found that individuals with debt, especially mortgages, behave differently than those who are debt-free.
Here are their main findings:
- Nearly half of all people in their 60s with debts continue to work, compared with only one-third of those who have no debt.
- Mortgages seem to have a greater influence on their decisions than credit card bills or other consumer debt. At age 64, for example, more than two-thirds of homeowners with mortgages still work, compared with just over half of homeowners who’ve paid them off.
The researchers contend that rising debt levels are changing the U.S. retirement landscape.
“More than ever,” they said, “retirement security will depend on having enough income and assets to pay for basic living expenses and to service debt.”
Full disclosure: The research cited in this post was funded by a grant from the U.S. Social Security Administration (SSA) through the Retirement Research Consortium, which also funds this blog. The opinions and conclusions expressed are solely those of the blog’s author and do not represent the opinions or policy of SSA or any agency of the federal government.
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