Retiring in debt? Differences between the 1995 and 2004 near-retiree cohorts

This article uses the Federal Reserve Board's Survey of Consumer Finances to examine the debt holdings of near-retirees (aged 50-61) in 1995 and 2004. Employing a variety of measures of household borrowing, we find that near-retirees in 2004-the leading edge of the baby-boom cohort--had more consumer and housing debt than their counterparts in 1995. We observe a modest increase in the median debt service and debt-to-assets ratios between the two cohorts, but no statistical difference in the average ratios. Analysis of several demographic and socioeconomic subgroups reveals certain population segments, such as households headed by single women, with significantly higher debt service ratios in 2004. We discuss the implications of these trends for the retirement income security of older baby boomers and suggest further avenues of research.