Household Debt and Financial Well-Being in Retirement

Abstract

Recent trends in housing and financial asset appreciation would appear to be improving the financial well-being of older Americans. However, without also understanding debt, it is impossible to know whether retirees are wealthier, or better-off. This paper addresses two related topics: first, how have household debt and net asset levels evolved for those past age 50, and second, controlling for net asset levels, are there important roles for debt management to play in achieving a financially secure retirement or, conversely, does debt have a corrosive effect on household measures of financial well-being in retirement?

The research will use the Health and Retirement Study (HRS) panel data from 1992 – 2016 to investigate household debt and net asset levels for this population, both ahead of and while in retirement. Next, using measures of well-being contained in the data, the research will explore how changes in debt correlate to (1) changes in net assets and (2) changes in well-being.