Consumer Debt Problems

Americans age 50 or older carried nearly triple the amount of debt in 2022 compared with 1989 when adjusting for inflation. In 2022, they carried an average of $109,640, compared with $37,386 in 1989 (in 2022 dollars). This increase in debt burden is jeopardizing the financial security of millions of older people as their income usually decreases while medical expenses increase.

As a result, the long-term retirement security of many families is at risk. AARP surveyed working families in April 2021 and found that the two main barriers to people saving more for retirement are the lack of money (55 percent) and debt payments (44 percent). The consequences can be even greater for older families carrying debt into their retirement years. When this occurs, it can be difficult to keep up with monthly payments.

In 2022, 6.2 percent of families age 50 and older had a debt burden of greater than 40 percent. This means that they devoted over 40 percent of their gross income to debt payments. This figure underscores that, after also paying for other expenses like taxes, food, medical care, and utility costs, many families have little, if any, income left for other purposes. Older Black and Hispanic/Latino families face much higher debt burdens than older white families.

The incidence of debt carried by older families headed by someone age 75 and older is particularly troubling. The percentage of families in this age category carrying debt more than doubled between 1989 and 2022, from 21 to 53 percent.

Another sign of debt stress among older Americans is a rise in bankruptcy filings. In the third quarter of 2024, 46 percent of new bankruptcy filings were made by people age 50 and older. In addition, the share of bankruptcy filers age 65 and older more than quadrupled between 2002 and 2022. A key reason for bankruptcy filings among older adults is the shift away from defined-benefit pensions and reductions in social safety net programs.