Baby Boomers in Houston Carry the Most Debt

Inside Subprime: April 19, 2019

By Lindsey Frankel

According to the Federal Reserve’s Survey of Consumer Finances, 70 percent of households headed by older adults between ages 65 and 74 carried some form of debt in 2016, including mortgages, auto loans, credit card debt, and other types of loans, such as payday loans.

While younger Americans are saddled with debt from student loans, baby boomers have their own share of non-mortgage debt, and a report from Lending Tree found that the median balance was highest in Houston, Texas. Residents of the city carry a median of $31,626. Following in second and third place were Little Rock, Arkansas and San Antonio, and four Texas cities ranked in the top ten. The cities with the least debt were Detroit, Michigan and Oxnard, California.

U.S. adults born between 1946 and 1964 are carrying a median balance of more than $25,000 in non-mortgage debt, according to the report. Auto loans accounted for the greatest share of debt at 38.5 percent, followed by credit card debt at 34.9 percent.

The numbers are concerning because most financial advisors suggest paying off debt before retiring, and many baby boomers will soon be entering that phase, if they haven’t yet already.

Debt in retirement can be difficult to manage, since most retirees live on a fixed income from savings, a pension, or Social Security. And their expenses, such as medical bills, typically increase as they age.

While auto loans and credit cards are mostly to blame for debt problems in Houston and across the nation, older adults are carrying a surprising amount of student loan debt as well. In 2017, adults over the age of 60 were plagued with a total of $85.4 billion in student debt, up from $15.9 billion a decade before. 2.8 million adults over the age of 60 now have student loan debt, according to data from the Federal Reserve Bank of New York.

And a good portion of baby boomers are having trouble staying up-to-date with their payments as well. Nearly 4 in 10 are in default, which means the income they receive from Social Security might be garnered. For low-income baby boomers that are already strapped for cash, an unexpected expense, such as a medical bill, could be impossible to cover. This leads older adults, who are often the target of payday loan providers, to take on even more debt to make ends meet.

Those struggling with debt in retirement may be helped by debt consolidation. Baby boomers carrying excessive debt should also seek help from a financial advisor, credit counselor, or bankruptcy attorney. And older adults who need quick access to credit should consider other alternatives before taking out a payday loan.

Learn more about payday loans, scams, and cash advances, and check out our city and state financial guides, including Illinois, Chicago, Texas, ArlingtonAustinDallasEl PasoFort Worth, Houston, IrvingKilleenMcAllenPlanoRound RockSan AntonioTylerWaco and more.