Americans have fallen back in love with debt.
Total household debt, including mortgages, student loans, car loans, credit cards and other debt, fell after the Great Depression, but has rebounded steadily in the years since. Overall, U.S. debt reached a new high of $13 trillion last year, 280 billion higher than the record set in 2008, according to the New York Fed.
Funds from the Federal Reserve's Consumer Finance Survey are used to investigate how much debt the United States has and what types of debt it has at each age.
It turns out that people's highest income year seems to be their highest debt year. People aged 45 to 54 reported the highest total debt, at $134600. People aged 35-44 had the second largest income, at $133,100.
The following are the total liabilities of Americans by age:
Below $35: $67,400, $35 -$44, $13,3100, $45 -$54, $134,600, 55 -$64, $108,300, 65 -$74, $66,000, 75 and more: $34,500
John R. Salter, professor of financial planning at Texas Tech University, said this was unexpected. "When people have children and children's needs, this trend tends to follow. We see an increase in debt as most people seek larger housing to get more family space, buy cars for their children, or pay for their college tuition.
Over the years, Salt speculates, people may be more willing to take on debt: this stage of life is also often when people feel their careers are established and they seek promotions and raises to earn higher incomes.
According to the Federal Reserve, the following table lists the average debt levels and types of all consumers in the United States in 2016.
It has symmetry to some extent. For those under 35 who are just starting out, their average debt is $67,400. This is equivalent to an average debt of $66,000 for people aged 65 to 74. Both groups are out of peak earnings and are unlikely to have child-related expenditures. (We will reach Group 75 + in one minute.)
However, the types of debt held by the two groups are quite different.
Families under 35 bear the most educational debt - a function of their age, and of the recent surge in education costs and Funds - a problem that older people are unlikely to face. In the millennium, families owed an average of $148,000 in student loans.
On the other hand, for 65-74 people, the second largest source of debt is related to real estate. Real estate is not the main housing, it may be resort or investment real estate.
Debt levels for people aged 75 and over have fallen sharply, with their average debt below $35,000, mostly in the form of mortgages. Nevertheless, some experts point out that the five-digit debt level is still worrying.
Ron Roddis, professor of finance at the University of West Kentucky, said: "We see that people have much more debt than previous generations." "Previously, most people had paid off their mortgages for 30 years before retirement, but these generations had not used the net worth credit line and refinancing options. Reimbursement of such loans does contribute to retirement cash flow and make your financial situation less volatile."
Some people worry that younger families will be burdened with more debt as they grow older, compared with today's 60 and 70 years old.
Lucia Dunn, a professor of economics at Ohio State University, who studies consumer debt, said: "Young people are taking on debt at higher interest rates and paying it back at lower rates." "By the time they reach 75, their debt situation will be very different from what we have seen so far. When you predict these trends, you are less optimistic.
These figures take into account the debt levels of all Americans, both borrowers and non-borrowers, and the average debt levels of the group as a whole. So Money also studied the Fed's public data sets, which only considered the debt levels of those who did borrow. The results are as follows.
In this case, after the age of 35, the total debt burden rises rapidly, and as people move closer to retirement, the debt burden will only slightly decrease. Some areas, such as education loans, car loans and credit card balances, are relatively consistent across all ages, suggesting that for those who habitually borrow for car purchases, the amount of borrowing varies little with age. (On the other hand, among children aged 35 to 44, the highest proportion of car-related debts was 44%, which dropped to 13.7% among children aged 75 and over.
Educational debt has a similar pattern. The average balance remained fairly consistent in the age group under 75, hovering between $3290 and $37,000. However, the proportion of education-related debt among all age groups declined steadily over time. About 45% of people under 35 have educational debt, but that figure has dropped by about 10 percentage points. Every subsequent queue, before bottoming out, has nothing for people over 75.
Another big difference between charts is the green belt of "other" debt in the second chart, especially for people aged 75 and older. According to the Federal Reserve, this category includes loans under pension or life insurance policies, affecting only 1.5% of the population aged 75 and over. However, the size of the balance owed implies the budgetary difficulties faced by many retirees trying to live on a fixed income.
Other differences between charts are less surprising. Although relatively few people (less than 10% of all age groups) are in debt on Non-major housing, for example, in the first chart, some of the things reflected in the relatively slender light blue band can be substantial, which makes debt more important to the holders, as shown in the second chart.
Both Royaz and Salt point out that all generations have shown a greater degree of comfort, all forms of debt. "As people become more comfortable with financing, the idea of saving for what you need and buying it directly has diminished," Salt said. He adds that this may pose a problem in the future: "These specifications are accompanied by future risks, and you will be able to pay them all."