Working Paper: NBER ID: w23664
Authors: Annamaria Lusardi; Olivia S. Mitchell; Noemi Oggero
Abstract: We analyze older individuals’ debt and financial vulnerability using data from the Health and Retirement Study (HRS) and the National Financial Capability Study (NFCS). Specifically, in the HRS we examine three different cohorts (individuals age 56–61) in 1992, 2004, and 2010 to evaluate cross-cohort changes in debt over time. We also use two waves of the NFCS (2012 and 2015) to gain additional insights into debt management and older individuals’ capacity to shield themselves against shocks. We show that recent cohorts have taken on more debt and face more financial insecurity, mostly due to having purchased more expensive homes with smaller down payments.
Keywords: No keywords provided
JEL Codes: D14; D15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| recent cohorts of older individuals have taken on more debt (G51) | greater financial insecurity (D14) |
| purchasing more expensive homes with smaller down payments (G51) | greater financial insecurity (D14) |
| age cohort changes (J11) | debt levels (H63) |
| higher debt levels (H63) | sensitivity to interest rate fluctuations (E43) |
| worsening financial vulnerability indicators (F65) | increased risk of financial distress (G33) |
| poor health (I14) | higher debt levels (H63) |
| unexpected income declines (E25) | higher debt levels (H63) |