Household debt over the life cycle

I. Introduction

Alarming stories of older Americans who are going deeper into debt have been featured in the popular press (Breckenridge & McGregor, 2003; Marmon, 2003). Unlike the elders of previous generations, today's seniors have been characterized as carrying high credit card balances and accumulating mortgage debt. Moreover, the data on U.S. family finances support this claim. According to the Survey of Consumer Finances (SCF), the proportion of older households holding installment debt and credit card balances increased from 4.2 and 11.2% to 9.5 and 18.4%, respectively, between 1998 and 2001 (Aizcorbe, Kennickell & Moore, 2003). Also, the increased problem with late debt payments for older households suggests that the debt holders among this group face credit-related financial problems. The percentage of older households with any debt payment 60 days or more past due has increased since 1995, while the percentage did not vary much for other age groups (Aizcorbe et al., 2003). Despite these observations, there has been little study of the relationship between the age of the household head and the amount and types of debt that the household holds.