Different kinds of debt by age – some surprises!

When it comes to debt, there are many different kinds.  There is mortgage debt (primary mortgages, second mortgages, lines of credit, etc.), vacation home or secondary residences, credit cards, education loans (both owed by students, or by parents and/or grandparents), vehicle debt, and other miscellaneous debts (e.g., loans against pensions or life insurance).

I’ve written posts on various angles on debt previously. Student loans, buying a car once retired, getting out of debt, good debt vs bad debt, and more.

This article on Money.com “This Is How Much Debt the Average American Has Now—at Every Age” by Kerri Anne Renzulli, provides insight into debt by age which is a different perspective than most articles which simply lump everyone together without regard to age. Also shown is debt by borrowers as well as by overall population.

You can see which age groups carry the most debt as well as by category by age. For example, “People’s peak earnings years also appear to be their peak debt years.” People are also carrying more debt into retirement than previously. The second graph shows how people 65+ are relying on “other” debt to a great extent; a worrisome trend.

 

Of course, the issue is paying all that debt off, or relying on the estate to settle those debts.

I don’t have researched sources to support an observation I’ve made, that recessions tend to happen when the issuance of debt becomes very prevalent and wide spread, and then a shock happens that affects the ability to repay the debt … Leaving the banking system reeling with declining asset values as people default (debt to banks are the assets side of the balance sheet; exasperated by people fleeing investments and putting more and more cash into banks, which is the liability side of a bank’s balance sheet; i.e., rising liabilities against declining asset values).  In other words, an over extended financial system that takes time to recover after a recession hits.

 

Photo By Filipa Machado (Matildi’s Turned Four..) [CC BY 2.0 ], via Wikimedia Commons

 

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