American Debt by Age: Who Owes the Most and Why?

The COVID-19 pandemic has taken a toll on the finances of many Americans, pushing the total household debt to a record-breaking $17.06 trillion1 as of the fourth quarter of 2022. But how does this debt vary by age group, and what are the main factors behind it?

According to data from the Federal Reserve Bank of New York2, the age group with the highest debt is 40 to 49, totaling $4.38 trillion, followed by the 50-to-59 age group and the 30-to-39 age group. Conversely, the age group with the least amount of debt is the 18-to-29 age group, with $0.82 trillion.

The main type of debt for most age groups is mortgage debt, which accounts for about 70% of the total debt. Mortgage debt is especially high for the 40-to-49 age group, who have an average balance of $41,8303, as they are likely to be homeowners with families and higher incomes. However, mortgage debt has also increased for the older age groups, as some of them may have refinanced their homes or taken out home equity lines of credit to cope with the economic downturn.

Another significant type of debt is student loan debt, which affects mostly the younger age groups. The average student loan debt for the 18-to-29 age group is $5,6403, while for the 30-to-39 age group it is $9,3903. Student loan debt has been a growing burden for many Americans, as the cost of higher education has risen faster than inflation and wages. Student loan debt can also affect other aspects of financial well-being, such as credit scores, savings, and homeownership.

Auto loan debt and credit card debt are also common types of debt for Americans of all ages. Auto loan debt has an average balance of $5,4703, while credit card debt has an average balance of $3,4803. Both types of debt have seen an increase in delinquency rates – missed payments of 30 days or more – in recent years, especially during the pandemic. This may indicate that some Americans are struggling to keep up with their monthly payments or are using credit cards to cover their expenses.

The age group that has experienced the greatest rise in debt over the past decade is the 70 and above age group, which has seen a 31% increase in their total debt since 20194. This may be due to several reasons, such as medical bills, living expenses, supporting family members, or lack of retirement savings. The 70 and above age group also has the highest share of credit card debt among all age groups, at 21%4.

Debt can have both positive and negative effects on individuals and society. On one hand, debt can enable people to invest in their education, buy a home, or start a business. On the other hand, debt can also create stress, limit choices, and reduce wealth. Therefore, it is important to manage debt wisely and seek help if needed. There are various options available for people who want to reduce their debt, such as budgeting, refinancing, consolidation, or counseling.

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