On the Hook: Debt and Adults 50-Plus

Debt is a reality for many adults 50-plus — and it can be stressful. New AARP research reveals that crises such as job loss and health problems, as well as the high cost of everyday expenses, can trigger big problems with debt.

Results of a new national survey show that nearly three in four Americans 50 and over carry some form of debt. Those who carry debt say they believe that borrowing is both necessary and risky. Loans enable people to buy homes and cars and pay for college. Yet, some older adults are overextended and don’t know where to turn for help. Recent economic pressures — particularly inflation — have made the situation worse for many and may have long-term ramifications for their finances in retirement.

The 2023 AARP Debt Survey found that 61% of the nearly 7,400 surveyed adults 50-plus who carry debt feel that their level of debt is a problem, including 16% who say it is a major problem.

Those with incomes under $40,000 are more than twice as likely as those with incomes of $75,000 or more to say their debt is a major problem. Debt is more likely to be problematic for women than men; and it is more of a burden for Black and Hispanic adults than for non-Hispanic white adults.

Those who describe their debt as a major problem spend an average of 53% of their monthly income on debt payments, while those who don’t view their debt as a problem spend just 27% of their monthly income repaying debt.

Credit cards are the most common type of debt. Of adults 50 and over who carry debt, nearly six in ten (59%) carry credit card balances month over month. Among adults who carry credit card debt and who describe their total debt as a major problem, about half (46%) owe $10,000 or more in credit card debt.

Perceived Benefits and Risks of Debt

Overall, 84% of adults 50-plus who carry debt say that taking on debt is necessary for some people to make ends meet and 74% say it is the only way for some to achieve their life goals. While about three in four respondents think debt does not harm most people’s long-term financial security if they pay their monthly loan payments on time, the same share believe any type of debt can get you in trouble.

Reasons for Debt

Unpacking why older adults carry debt, the survey uncovered that housing costs represent the most commonly cited major reason for debt, for both homeowners and renters. Other relatively common reasons are the cost of vehicles, everyday expenses, and loss of employment due to disability or illness. Those who view their level of debt as a major problem are especially likely to attribute their debt to everyday expenses and life shocks such as loss of employment, health problems, high medical expenses, and the death of a spouse or other family member. Having caregiving responsibilities and losing money due to fraud are also more common occurrences among people with problematic debt levels.

Whatever the cause, respondents to the survey indicate the burden of debt clearly weighs on their well-being and future plans.

Emotional and Financial Impact of Debt

About one-third of adults 50-plus who carry debt say they have felt stressed about their debt within the past year, and one-fifth have felt depressed. It’s worse for those who describe their debt as a major problem: three-quarters say they have felt stressed; more than half have felt depressed.

Just how does debt impact the lives of older adults? The report indicates that, in the past 12 months, 40% cut back on extras as a result of their debt, 30% took fewer vacations, 27% cut back on basic expenses, and 26% saved less for retirement.

Indeed, roughly two in three (68%) adults 50 and over who carry debt say that their debt has hurt their ability to save for retirement. Of those who describe their debt as a major problem, just 22% are confident that they will have enough money in retirement, while 85% of those who don’t see their debt as a problem believe they will be secure.

For many, an emergency expense costing $2,000 would expose the fragility of their financial situation. Just 17% of those who describe their debt as a major problem could cover a $2,000 unexpected expense, while 81% of those who do not view their debt as problematic say they could come up with the money without taking out a loan, selling something, or dipping into savings.

Efforts to Reduce Debt

Eight in ten of those who carry debt say that they have tried to reduce their debt in the past 12 months; however, relatively few made a plan or looked for information. Even though help exists for those who struggle with debt, such as budgeting tools or public benefit programs, roughly seven in ten (69%) respondents have not looked for information to manage their debt. Some may be too uncomfortable to reach out, while others may not know where to turn.

Resources and online tools such as the following are available to help people who are struggling with debt:

• AARP Money Map^TM online tool that can help consumers plan for expenses, develop a debt plan, or create a budget.
• AARP Foundation provides links to several resources to help people connect with public benefit programs in their state.
• The Consumer Financial Protection Bureau also provides resources for consumers on a range of topics.
  

Methodology

This research was based on a May 2023 survey of adults ages 50-plus who have at least one type of debt such as a credit card balance carried over from a previous month, mortgage, unpaid medical bill, car, or student loan. The survey was fielded online and via phone using the Foresight 50+ panel. Funded and operated by NORC at the University of Chicago, Foresight 50+ is a probability-based panel designed to be representative of the U.S. household population ages 50 or older. The national sample of 7,387 adults ages 50-plus included 1,597 African American/Black adults and 1,642 Hispanic adults and was weighted by age, gender, education, race/ethnicity, and census division to reflect the U.S. population of adults age 50-plus who have debt.

For more information, contact S. Kathi Brown of AARP Research at skbrown@aarp.org. Media inquiries should be directed to media@aarp.org.