Rising Debt Levels Could Impact Retirement Security

While home values are increasing across many parts of the country, so are the levels of mortgage debt held by older homeowners, which could impact their future retirement security, according to an Issue in Brief published this week by the Center for Retirement Research at Boston College.

As the CRR gathers data for its 2016 National Retirement Risk Index, which it publishes every three years to gauge retirement preparedness, “one clear trend that has emerged is an increase in the percentage of older households carrying mortgage debt into retirement and an increase in the amount of this debt,” reported the authors of How Much Does Housing Affect Retirement Security? An NRRI Update.

The percentage of households aged 55 and older with some form of housing debt increased by 8% between 2001 and 2013, according to the brief.  The debt burden – defined as the median ratio of housing debt to household income – increased by more than 50% for the same age group.

“The big question is whether the recent high-debt pattern reflects a one-shot reaction to the housing bubble that will gradually fade away or a more permanent habit of carrying mortgages into retirement. Only time will tell,” wrote the brief’s authors.