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    W19-06: Debt Stress and Mortgage Borrowing in Older Age: Implications for Economic Security in Retirement

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    WI19-06: Debt Stress and Mortgage Borrowing in Older Age: Implications for Economic Security in Retirement (723.4Kb)
    Date
    2019
    Author
    Moulton, Stephanie
    Haurin, Donald
    Loibl, Caezilia
    Publisher
    Center for Financial Security
    Metadata
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    Abstract
    The amount of financial debt held by seniors in the U.S. has grown substantially over the past decade. Prior research links higher levels of debt to increased psychological stress and decreased physical health. For seniors, these effects may be exacerbated by fixed incomes and limited ability to offset higher monthly debt obligations through increased labor supply. This study will quantify stress associated with different forms of debt held by seniors—including reverse mortgages, a type of debt available only to seniors; and will explore the relationships between different types and timing of mortgage debt and older adults’ decisions regarding labor force participation and claiming of Social Security Benefits. To analyze these relationships, we use panel data from six waves of the Health and Retirement Study (HRS), supplemented with our own survey data on more than 1,000 reverse mortgage borrowers. Reverse mortgage borrowers are underrepresented in traditional survey populations and thus have been understudied despite potential growth in the market. This research links directly to the SSA’s focal area of measuring sources of income and adequacy, and in particular consumer debt as part of a household’s financial portfolio in retirement that presents an evolving risk to economic security. Debt stress among seniors can also have implications for labor force participation and the timing of draws from OASI. In addition to identifying the relationship between debt stress and retirement decisions, we examine the role of reverse mortgages for alleviating debt stress.
    Subject
    Welfare
    Demographics
    Labor Supply
    Consumer Finance
    H5
    Permanent Link
    http://digital.library.wisc.edu/1793/82392
    Related Material/Data
    https://cfsrdrc.wisc.edu/project/wi19-06
    Type
    Working Paper
    Description
    This study focuses on the relationship between mortgage debt, financial stress, and early claiming of Social Security retirement benefits.
    Citation
    Moulton, S., Haurin, D., & Loibl, C. (2019). Debt Stress and Mortgage Borrowing in Older Age: Implications for Economic Security in Retirement. Retirement & Disability Research Center. https://cfsrdrc.wisc.edu/publications/working-paper/w19-06.
    Part of
    • RDRC FY2019 Research Projects

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