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Retirees and Household Debt

Household debt among retired people has increased in recent years, according to data from Next Avenue. Around 60% of 65+ households carried debt in 2016, up markedly from about 42% in 1992. Credit card debt and student loans have increased as well.

One of the most stressful debt type for older Americans is second mortgages. However, dollar for dollar, reverse mortgages are less stressful than regular mortgages.

“Debt-related stress is a growing concern, given the growing amount of debt held by older adults as they enter retirement,” wrote the authors of Debt Stress and Mortgage Borrowing in Older Age: Implications for Economic Security in Retirement, a paper just presented at the Retirement and Disability Research Consortium, in Washington, D.C.

Despite the increased risk of debt among older Americans, homebuilders are feeling positive about this segment of the market. Builder confidence in the single-family 55+ housing market remained solid in the second quarter with a reading of 71, edging down one point from the previous quarter due to softness in traffic of prospective buyers, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released earlier this month.

For the three index components of the 55+ single-family HMI, present sales remained even at 76, expected sales for the next six months increased one point to 78 and traffic of prospective buyers fell five points to 56.

“Although the single-family HMI fell slightly, builder sentiment still remains strong for this segment of the market,” said Karen Schroeder, chair of NAHB's 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “In fact, the reading of 71 is just one point off from the all-time high of 72 from the previous quarter. We expect the 55+ housing market to continue on a positive path moving forward.”

About Author: Seth Welborn

Seth Welborn is a Staff Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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