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Home » Debt Relief » Baby Boomer Debt Is Growing (And Not Because Of Mortgages)

Baby Boomer Debt Is Growing (And Not Because Of Mortgages)

August 8, 2020 by Brian Allen

Baby boomer debt: Baby boomers have the second-highest debt burden of any generation – a study by Experian has found that people between the ages of 55-73 have an average debt of $95,095. This debt burden is only exceeded by Generation X, which has an average debt burden of $134,323. But where is this debt coming from? Let’s look at the top 10 sources of debt held by baby boomers, based on a study released by Transamerica Institute.


Top 10 Reasons Baby Boomer Debt is Increasing

  1. Loan From Family/Friends (1%)
    Only a very small percentage of people report owing money to family and friends. Borrowing money from those who are close to you can cause a lot of issues with your relationships, so it’s not surprising that this is not a major source of debt among baby boomers.
  2. Payday Loans (2%)
    13% of millennials and Gen X’ers have taken out payday loans within 2 years, but this is less common for older baby boomers, who are typically more financially stable, and may know more about the financial pitfalls of payday lending.
  3. Tax Debt (5%)
    Tax debt is a relatively common baby boomer debt, and it’s important for older individuals to resolve this issue before retirement – unpaid debt can result in the garnishment of Social Security.
  4. Home Equity Loan (6%)
    A home equity loan is a loan that’s taken out against the value of your home. These loans are most often used for home improvements like redoing kitchens, bathrooms, and other areas (similar to a home improvement loan, but without the higher person loan interest rates). However, they can also be used as a source of emergency funds for homeowners.
  5. Student Loan (9%)
    Older borrowers have mostly paid off their student loans, but this not the case for everyone. An Experian study found that there were 17% more student loan borrowers above the age of 62 in 2019 compared to 2018.
  6. Medical Debt (10%)
    Older individuals have more medical loan needs, and the high cost of care and insurance means medical debt is a major baby boomer debt – in fact, it’s the #1 cause of bankruptcy in America across all age ranges.
  7. Personal Loan (10%)
    Baby boomers hold a higher amount of personal loan debt than any other generation, according to Experian, with an average balance of nearly $20,000.
  8. Car Loan (34%)
    While some baby boomers have paid-off vehicles, more than ⅓ of all older adults are still paying off a car loan – and more expensive vehicles and longer loan terms mean they may continue to owe auto loan debt for years to come.
  9. Mortgage (40%)
    Baby boomers have a home ownership rate of over 60%, and most boomers have paid off their home loans, though about 40% still owe on their mortgages.
  10. Credit Card Debt (42%)
    This is the most common type of baby boomer debt, but the amount of debt held by this generation is decreasing. They have an average of around $6,788 per borrower in 2019, a decrease of -1% from 2018 – and the lowest debt burden among this age range in the past 7 years. In contrast, millennials have an average balance of about $4,712 – but this grew 7% year-over-year between 2018 and 2019.

Related:

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  • Will Student Loan Debt Forgiveness Help Current Debt? What You Should Know
  • Should I Use My 401(k) To Pay Off Debt?
  • Debt Consolidation Tips for Borrowers With Bad Credit

Filed Under: Debt Relief

About Brian Allen

Brian Allen has been helping people make smarter financial decisions for over 10 years. As the Editor-in-Chief for Goloans, Brian writes about sage financial advice, "how to" articles, and reviews about lenders and creditors.

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