2019 RDRC Meeting: Debt Stress and Mortgage Borrowing in Older Age: Implications for Economic Security in Retirement

Published: 2019


The amount of financial debt held by U.S. seniors has grown substantially over the past decade. Prior research links higher debt levels 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 quantifies stress associated with different debt forms held by seniors, including reverse mortgages, a type of debt available only to seniors. It also explores 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. 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.

Key Findings