Understanding Debt in the Older Population

TitleUnderstanding Debt in the Older Population
Publication TypeReport
Year of Publication2020
AuthorsLusardi, A, Mitchell, OS, Oggero, N
Series TitlePension Research Council Working Paper
Document NumberWP2020-04
InstitutionUniversity of Pennsylvania
KeywordsDebt, financial fragility, Financial literacy, Mortgages, Retirement, student loans

Poor financial capability can have important consequences for well-being in later life. To explore aspects of financial management related to debt, we have designed and analyzed a new module in the 2018 Health and Retirement Study along with information from the 2018 National Financial Capability Study to evaluate the factors associated with debt and debt management in later life. We show that, even for older Americans, student loans and unpaid medical bills represent a large proportion of their debt, and having children also contributes to their indebtedness. By contrast, the more financially literate have more positive financial perceptions and behaviors. Specifically, being able to answer one additional financial literacy question correctly is associated with a higher probability (3-6 percentage points) of reporting an above average credit record and planning for retirement. Clearly, financial knowledge can help limit debt exposure at older ages.

Citation Key10730