The Graying of American Debt

Wharton Pension Research Council Working Paper No. 2019-09

Published in Mitchell, O., and A. Lusardi (Eds.) (2020). Remaking Retirement: Debt in an Aging Economy. Oxford, UK: Oxford University Press.

Posted: 20 Feb 2020 Last revised: 30 Nov 2020

See all articles by Meta Brown

Meta Brown

Federal Reserve Bank of New York

Donghoon Lee

Federal Reserve Bank of New York; New York University

Joelle Scally

Federal Reserve Bank of New York

Wilbert van der Klaauw

Federal Reserve Bank of New York; IZA

Date Written: 2019

Abstract

Between 2003 and 2015, real aggregate debt in the hands of Americans aged 50 to 80 increased by 59 percent. Meanwhile, real debt held by Americans in their twenties and thirties was approximately flat. Using data from the Federal Reserve Bank of New York’s Consumer Credit Panel, we describe the extent of this debt increase and the distribution of debt growth by loan type. Real per capita home-secured debts held by older consumers show the steepest growth, though older borrowers have increased their obligations in all major debt categories. For long-held debts, these developments lead us to ask how such changes emerged: did older borrowers carry more debt through the Great Recession, after which access to consumer credit declined for new borrowers of all ages? Alternatively, have loan originations since the Great Recession favored older over younger borrowers? While our results indicate that the stock of long-held, home-secured debt sits largely with older borrowers, we also uncover evidence of a decisive tilt of new auto and mortgage originations away from younger borrowers and toward borrowers in their fifties, sixties, and even seventies. The motivation behind older consumers’ substantial new borrowing, often with long repayment terms, is the focus of ongoing research.

Keywords: older adults, debt, home-secured debt, Great Recession

Suggested Citation

Brown, Meta and Lee, Donghoon and Scally, Joelle and van der Klaauw, H. Wilbert, The Graying of American Debt (2019). Wharton Pension Research Council Working Paper No. 2019-09, Published in Mitchell, O., and A. Lusardi (Eds.) (2020). Remaking Retirement: Debt in an Aging Economy. Oxford, UK: Oxford University Press., Available at SSRN: https://ssrn.com/abstract=3540474 or http://dx.doi.org/10.2139/ssrn.3540474

Meta Brown (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Donghoon Lee

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-8699 (Phone)
212-720-1844 (Fax)

New York University

NY
United States

Joelle Scally

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

H. Wilbert Van der Klaauw

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5916 (Phone)
212-720-1844 (Fax)

IZA ( email )

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