Nearly half of all Americans expect to retire in debt

[ipatent]

Nearly half of all Americans expect to retire in debt, survey finds

46% of all Americans expect to retire in debt, according to a survey by personal finance site MagnifyMoney.

"Debt can derail a lot of folks' retirement plans," said Ismat Mangla, MagnifyMoney's executive editor.

These days, older Americans owe more than ever before.

The total debt burden for Americans over age 70 increased 614% through 2021 from 1999, to $1.27 trillion, according to data from the Federal Reserve Bank of New York.​

__________________________

Serious problem for society & the boomers.

 

[RedSun]

Well, different people carry debts for various reasons.

People like Elon Musk, Tim Cook etc carry debts because they do not want to sell all their Apple and Tesla stocks and pay the taxes. They will be happy to borrow at 2-3% to carry some debts.

If stock markets yield 15% return for the year, it pays to borrow at 5% and invest in stock markets etc. Same with buying houses. Also borrow on margins to trade stocks.

It is the bottom half of the poor people who are in some trouble. They are scared of getting covid and some choose to leave jobs. They borrow to meet daily expenses.

Over next two years, if inflation continues to become non-transitory, Fed has to raise interest rate, things can be interesting. Borrow cost can creep up and make some of the debts expensive. Some poor people may not have enough income to pay back the debts. If stock and property markets come down, a lot people would be in trouble.

 

[xandman]

They should. Negative real rates forever.

 

[lindq]

Nearly half of all Americans expect to retire in debt, survey finds

46% of all Americans expect to retire in debt, according to a survey by personal finance site MagnifyMoney.

"Debt can derail a lot of folks' retirement plans," said Ismat Mangla, MagnifyMoney's executive editor.

These days, older Americans owe more than ever before.

The total debt burden for Americans over age 70 increased 614% through 2021 from 1999, to $1.27 trillion, according to data from the Federal Reserve Bank of New York.​

__________________________

Serious problem for society & the boomers.

What does the term "in debt" mean? If I have a credit card or mortgage balance at the time of retirement, am I "in debt?"

Headline statistics like this can be very misleading. While debt may have increased since 1999, so has overall net worth.

 

[ipatent]

They should. Negative real rates forever.

If the debt is sitting in cash or used for living expenses, how does that help them?

 

[ipatent]

What does the term "in debt" mean? If I have a credit card or mortgage balance at the time of retirement, am I "in debt?"

Headline statistics like this can be very misleading. While debt may have increased since 1999, so has overall net worth.

You make a good point with respect to this story, let's broaden the topic out to address adequacy of boomer retirement savings:

1 in 4 Americans have no retirement savings — and those who do aren’t saving enough

One in 4 Americans have no retirement savings and those who are saving aren’t saving enough, PwC U.S. asset manager and wealth management leader Bernadette Geis told Yahoo Money.

"Those that are [saving], on average, what they have saved will afford them like $1,000 a month of actual cash while they're in retirement," Geis said.

The report found that the median retirement account balance for 55-to-64-year-olds is $120,000. When divided over 15 years, that would generate a modest distribution of less than $1,000 per month and even less for those who outlive their life expectancies.

The lack of retirement preparedness is leading to a path of a looming "crisis," Geis said, as Social Security is projected to be depleted by 2034 and “there's a huge demographic that aren't likely to meet their savings goal.”

Among those 60 years old or older, 13% have no retirement savings. That number increases to 17% among 45 to 59-year-olds, 26% among 30 to 44-year-olds, and 42% for those between the ages of 18 to 29.​

 

[murray t turtle]

What does the term "in debt" mean? If I have a credit card or mortgage balance at the time of retirement, am I "in debt?"

Headline statistics like this can be very misleading. While debt may have increased since 1999, so has overall net worth.

%%
YES;
even though many people use debt to buy real estate.100% of foreclosures are caused by debt.
I've paid cash + used debt. The banks prefer debt, so its a good way to help the banks+ bank stocks make money, especially if some one does it all their life.

 

[lindq]

You make a good point with respect to this story, let's broaden the topic out to address adequacy of boomer retirement savings:

1 in 4 Americans have no retirement savings — and those who do aren’t saving enough

One in 4 Americans have no retirement savings and those who are saving aren’t saving enough, PwC U.S. asset manager and wealth management leader Bernadette Geis told Yahoo Money.

"Those that are [saving], on average, what they have saved will afford them like $1,000 a month of actual cash while they're in retirement," Geis said.

The report found that the median retirement account balance for 55-to-64-year-olds is $120,000. When divided over 15 years, that would generate a modest distribution of less than $1,000 per month and even less for those who outlive their life expectancies.

The lack of retirement preparedness is leading to a path of a looming "crisis," Geis said, as Social Security is projected to be depleted by 2034 and “there's a huge demographic that aren't likely to meet their savings goal.”

Among those 60 years old or older, 13% have no retirement savings. That number increases to 17% among 45 to 59-year-olds, 26% among 30 to 44-year-olds, and 42% for those between the ages of 18 to 29.​

As one who has reporting in his background, here again I question the text, if not the source. (Bernadette Geis?)

Note that Ms. Geis references "retirement account", not net worth. And what is "retirement savings?" Is that IRA, 401K? Of course there are many sources for savings, and net worth, apart from retirement accounts.

To quote Mark Twain, there are "lies, damned lies, and statistics."

 

[ElCubano]

As one who has reporting in his background, here again I question the text, if not the source. (Bernadette Geis?)

Note that Ms. Geis references "retirement account", not net worth. And what is "retirement savings?" Is that IRA, 401K? Of course there are many sources for savings, and net worth, apart from retirement accounts.

To quote Mark Twain, there are "lies, damned lies, and statistics."

We can also question that about Net Worth. Is it all in a home, savings, bitcoin, risky or less risky assets, etc.

In other words is the net worth sitting on a faulty foundation. Debt can remain constant while net worth can gyrate.

 

[ipatent]

As one who has reporting in his background, here again I question the text, if not the source. (Bernadette Geis?)

Note that Ms. Geis references "retirement account", not net worth. And what is "retirement savings?" Is that IRA, 401K? Of course there are many sources for savings, and net worth, apart from retirement accounts.

To quote Mark Twain, there are "lies, damned lies, and statistics."

Here's another article reporting on "Net worth:"

Household net worth by age
Age of head of family Median net worth Average net worth
Less than 35 $13,900 $76,300
35-44 $91,300 $436,200
45-54 $168,600 $833,200
55-64 $212,500 $1,175,900
65-74 $266,400 $1,217,700
75+ $254,800 $977,600
__________________________________

$266,400 isn't much for retirement, and half have less than that, which is consistent with the other articles.