Older consumers are carrying more debt, including mortgage, credit card, and even student loan debt, into their retirement years than in previous decades, according to a new CFPB report.
The CFPB warned against the dangers of carrying a mortgage into retirement.
"Mortgage debt, the largest debt that older consumers carry, is the key driver of this trend. Today, compared to a decade ago, fewer older homeowners own their home outright," said the CFPB's "Snapshot of older consumers and mortgage debt" report. "For many of the roughly 4.4 million retired homeowners with mortgage debt, making monthly mortgage payments on top of paying other monthly expenses can be a hardship."
The CFPB estimates that about 80% of the 41.4 million Americans 65 years of age and older own their home.
"They have the highest homeownership rate among all age groups," said the CFPB report. "Our analysis shows that while the rate of homeownership has remained constant over the last decade, the number of older homeowners holding mortgages has increased."
The CFPB's analysis included data from the Census Bureau, the Federal Reserve, and consumer complaints submitted to the bureau.
"The CFPB's analysis of Census data shows that the percentage of homeowners' age 65 and older carrying mortgage debt increased from 22% to 30% (3.8 to 6.1 million) from 2001 to 2011," the CFPB found.
"Additional data from the Federal Reserve shows that consumers over age 75 had the greatest increase during this period. The proportion of consumers 75 and older with mortgage debt more than doubled from 8.4% to 21.2%."
Older consumers have also accrued less home equity as mortgage debt has increased. The CFPB warned that decreased home equity wealth is a great concern due to Americans' increased longevity and lack of financial preparedness for their retirement.
"For many, home equity – which is often their primary and sometimes only asset – may not be there when they are likely to need it later in life," said the report.
"A home can be a place of security for older Americans in their retirement years – a roof over their heads as well as a valuable asset," said CFPB Director Richard Cordray. "But as more seniors carry significant mortgages into retirement, they put themselves at risk of losing their nest eggs and their homes.
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