Understanding Debt in the Older Population

Annamaria Lusardi (), Olivia Mitchell and Noemi Oggero

No 15568, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Poor financial capability can erode well-being in later life. To explore debt and debt management among older Americans, age 51-61, we designed and analyzed a new module in the 2018 Health and Retirement Study along with information from the 2018 National Financial Capability Study. Even though this group should be at the peak of their retirement savings, it nevertheless carries debt due to student loans and unpaid medical bills; having children also contributes to carrying debt close to retirement. By contrast, the financially literate have more positive financial perceptions and behaviors. Specifically, being able to answer one additional financial literacy question correctly is associated with a higher probability of reporting an above average credit record and planning for retirement. Higher financial literacy is also linked to being less likely to carry excessive debt, being contacted by debt collectors, and carrying medical debt or student loans, even after accounting for a large range of demographics and other characteristics. Evidently, financial knowledge can help limit debt exposure at older ages.

Keywords: Retirement; Debt; Medical bills; Student loans; Mortgages; Financial literacy; Financial fragility (search for similar items in EconPapers)
JEL-codes: G40 G41 G51 G53 H31 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-age, nep-cwa and nep-dem
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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