A new Census Bureau report shows an alarming rate of older households carrying home debt well into retirement, and the amount of debt they're carrying has risen over recent years.
The share of home owners aged 65 to 69 with home debt has risen nearly 33 percent compared with data from 2000, while the share of those with debt aged 70 to 74 has surged nearly 65 percent, according to a new Census Bureau report showing wealth inequality in the U.S.
Older owners are failing to pay down their mortgages as diligently as previous generations, notes George Masnick, senior research fellow at the Harvard Joint Center for Housing Studies, on the JCHS blog.
“Both equity extractions to garner cash to pay for other expenditures and simple refinancing [to] extend the payment period for lower monthly payment costs will slow the pace at which home owners pay off their mortgages,” Masnick notes.
But older owners aren’t just carrying debt well beyond retirement; the amount of debt is growing considerably as well, Masnick says.
The median outstanding home debt for home owners aged 65 to 69 with a mortgage rose by 46 percent between 2000 and 2005 and another 8 percent between 2005 and 2011. For 70- to 74-year-olds, home debt has risen at rates of 18 and 33 percent in those time periods.
“Growing mortgage debt among the elderly is troubling,” Masnick writes. “Declining income later in life is inevitable for most households. With mortgage payments a continuing part of the monthly household budget, in addition to real estate taxes and the expense of home repairs, many elderly with high housing cost burdens will need to postpone retirement or spend less on other needs like food or health care."
"Fewer will be able to draw on wealth accumulated through growth in home equity to help pay the bills late in life. Some will let their homes fall into disrepair or will be forced to sell their homes when they would prefer to age in place. This is a trend worth our continuing attention and concern.”