The fact that scores of Americans are in debt should come as no surprise, given that most people use credit cards to fund purchases, auto loans to purchase cars, student loans to pursue education, and mortgages to become homeowners. If you think that baby boomers are well past carrying debt, think again.
Baby Boomers and Retirement
Baby boomers are typically classified as people who were born between 1946 and 1964. The most recent census data suggests that there were around 73 million baby boomers in the U.S. in 2019, and that all will be 65 years or older by 2030.
Millions retire every year, although 2020 witnessed a significant increase. According to Pew Research Center, around 28.6 million baby boomers went the retirement way in the third quarter of 2020, a jump of 3.2 million from the same quarter in the preceding year.
A McKinsey Global Institute (MGI) report suggests that close to 79 million baby boomers in the U.S. have benefited through record income levels and generation of significant wealth. However, the same report also points out that this generation’s spending has crossed record levels, it has amassed unmatched levels of debt, and it has been unsuccessful at saving adequate money for retirement.
While baby boomers who’ve retired are now trying to make the most of their savings and investments, not everyone’s in the same boat.
Baby Boomers and Debt
- 71.6% of families with members over 50 years old carried debt in 2019, up from 60% in 1998.
- 92.9% of baby boomers in the country’s largest metros have non-mortgage debt.
- 81.4% of baby boomers have credit card debt, and the highest overall median balance stands at a little below $4,000.
- The average total non-mortgage debt that baby boomers carry exceeds $25,800.
- Homeowners from this generation have average mortgage debt of over $191,000.
- When it comes to accounts that are 90 to 180 days past due, baby boomers have a 3.2% delinquency rate.
What Comes Next?
A 2020 retirement survey of workers highlighted that over 30% of baby boomers felt a dip in confidence levels when it comes to retiring comfortably owing to the COVID-19 pandemic. The pandemic was also one of the main reasons for the sudden surge in the number of baby boomers who retired. Baby boomers who feel they face an uncertain future should ideally focus on getting rid of debt by:
- Paying off their mortgages at the earliest
- Reducing medical debt
- Minimizing credit card debt
There is no doubt that several people from the baby boomer generation are facing difficulties in managing their debt. If you think you might be in the same boat, it’s best to get professional advice ahead of time. What helps is there are various alternatives that might work in providing the financial relief you seek.