People Over 50 Carrying More Debt Than in the Past - entering retirement burdened

[Liberal_in_LA]

People Over 50 Carrying More Debt Than in the Past
The average 65-year-old borrower has 47% more mortgage debt than those in 2003
Older Americans are burdened with unprecedented debt loads as more and more baby boomers enter what are meant to be their retirement years owing far more on their houses, cars and even college loans than previous generations.

The average 65-year-old borrower has 47% more mortgage debt and 29% more auto debt than 65-year-olds had in 2003, after adjusting for inflation, according to data from the Federal Reserve Bank of New York released Friday.

Just over a decade ago, student debt was unheard-of among 65-year-olds. Today it is a growing debt category, though it remains smaller for them than autos, credit cards and mortgages. On top of that, there are far more people in this age group than a decade ago.

The result: The composition of U.S. household debt is vastly different than it was before the financial crisis, when many younger households took on large debts they could no longer afford when the bottom fell out of the economy.

http://www.wsj.com/articles/new-york-fed-finds-large-increase-in-debts-held-by-those-over-age-50-1455289257

[GeoWilliam750]

1. Part of this increase in debt will be due to sharply reduced interest rates

Which push up asset prices whilst reducing income.

Thus, whilst as a percentage of income, debt service may not have risen so extremely, the principal portion of that debt has risen dramatically. Although I would have to check the mortgage calculators, at current interest rates, a 1% decline in interest rates will probably add about 15-20% to the value of real estate.

The ugliness of abnormally low interest rates may well be one of the greater problems of the society in that it destroys the value of savings, pensions, and social security.