LOS ANGELES–The days of older Americans burning their mortgage deeds after paying off their balances are becoming increasingly rare.
A new analysis reveals the share of homeowners ages 65 to 79 with a mortgage rose from 24% to 41%, while median mortgage debt surged by 400%, according to the Joint Center for Housing Studies at Harvard University.
“Mortgages make up about 70% of household balances. Conventional wisdom has long recommended that homeowners pay off their mortgage before retiring,” noted Marketplace.org in its reporting. “Yet over the past three decades, more older adults are carrying their mortgage into retirement, while the amount owed has increased dramatically. The combination adds to economic insecurity for many older Americans.”
‘Even More Dramatic’
Among homeowners 80 years and older, the numbers are even more dramatic, the report stated, citing data showing the share with mortgages jumped to 31% from 3%, and median mortgage debt increased by 750%.
“For a lot of people, I think this isn’t a choice. It isn’t a financial strategy. It’s more of a reality,” Jennifer Molinsky, director of the Housing an Aging Society Program at Harvard’s Joint Center, told Marketplace.org.
Linna Zhu, research analyst at the Urban Institute, further told Marketplace.org, “So for wealthier homeowners, maybe carrying a mortgage debt might be a strategic choice, but for many, most of the senior or older adults who are living on fixed incomes, it’s not a strategy — it’s a necessity. So, the stress of housing debt in retirement is real and growing.”
‘All-Time High’
The report further found the number of so-called cost-burdened older adults is at an all-time high. That means they are spending 30% or more of their income on housing, utilities, taxes and insurance.
“Ninety-seven of older owners with mortgages who are lower-income, have an income under $25,000, are cost-burdened, meaning they’re paying more than 30% of their income for housing,” Molinsky told the news outlet.
All of that comes at the same time many older homeowners are at greater risk of unexpected medical expenses, the report added.
