Debt and Financial Vulnerability on the Verge of Retirement
We analyze older individuals’ debt and financial vulnerability using data from the Health and Retirement Study (HRS) and the National Financial Capability Study (NFCS). Specifically, in the HRS we examine three different cohorts (individuals age 56–61) in 1992, 2004, and 2010 to evaluate cross-cohort changes in debt over time. We also use two waves of the NFCS (2012 and 2015) to gain additional insights into debt management and older individuals’ capacity to shield themselves against shocks. We show that recent cohorts have taken on more debt and face more financial insecurity, mostly due to having purchased more expensive homes with smaller down payments.
The authors thank Yong Yu for expert programming and research assistance. Additionally, they thank Melinda Morrill, participants at the 2016 Working Longer and Retirement conference at SIEPR/Stanford University, and at the CMV/OECD Seminar on Emerging Trends in Financial Education, Rio de Janeiro, Brazil, for suggestions and comments. We gratefully acknowledge financial support from the TIAA Institute and the Pension Research Council/Boettner Center at the Wharton School of the University of Pennsylvania. Opinions and conclusions expressed herein are solely those of the authors and do not represent the opinions or policy of the funders or any other institutions with which the authors are affiliated. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Olivia S. Mitchell
Mitchell serves as an Independent Trustee for the Wells Fargo Advantage Funds and has received more than $10,000 from the TIAA Institute for research on retirement security.
- For Americans aged 56–61, median indebtedness rose sharply from 1992 to 2004. For the top quartile, debt doubled between 1992 and...
ANNAMARIA LUSARDI & OLIVIA S. MITCHELL & NOEMI OGGERO, 2020. "Debt and Financial Vulnerability on the Verge of Retirement," Journal of Money, Credit and Banking, vol 52(5), pages 1005-1034. citation courtesy of