Borrowing money can enable opportunities otherwise out of reach financially, such as pursuing an education that can lead to employment, buying a car and facilitating a home purchase. However, if not managed effectively, it can undermine your financial well-being. As a retirement researcher, I am worried that debt may be eroding the long-term financial security of many workers who are nearing retirement.
According to a 2017 study by Experian, EXPN, +0.44% boomers have an average of $188,828 in mortgage debt and $27,513 in nonmortgage debt. Generation Xers, now entering their 50s, have even higher balances — including $231,774 in mortgage debt and $30,334 in nonmortgage debt.
Experts generally agree that younger people should be more likely to carry debt because they are just getting started and have their careers ahead of them with time to pay it down. Older workers who are closer to retirement, on the other hand, should be more likely to be without debt. In reality, however, our survey found that only 18% of age 50+ workers said their household does not have any debt. The three most often cited types of debt they do have: credit cards (56%), mortgages (49%) and car loans (38%).