Will Baby Boomers Drown in Debt?

Introduction

The fact that American households have debt is not a surprise: credit cards finance our purchases, car loans pay for our wheels, student loans help us with tuitions, and mortgages buy our homes. Yet the size of the debt can seem shocking. The aggregate burden runs to nearly $10 trillion, nearly twice what it was in 1992, even after adjusting for inflation. Today, household debt is equivalent to more than 80 percent of the nation’s economy, up from about 60 percent in the early 1990s (see Figure 1). Filings for bankruptcy have also soared. In 1991, 6 out of every 1,000 adults filed for bankruptcy. This rate climbed to 9 in 2001. Given the potential of debt to undermine the retirement security of an aging population, this Just the Facts examines trends in the debt burden for older workers over the past decade and assesses how vulnerable baby boomers may be in the future…