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Debt and housing burdens push adult children to support cash-strapped parents
A new Visa U.S. Economic Insights report says 41% of Americans ages 65 to 79 still have mortgages, and half of those households spend more than 50% of their income on housing.
A growing number of adult children are stepping in to help support cash-strapped parents, covering living expenses and debt payments, including long-term care costs, a shift that challenges the idea of wealth moving from baby boomers to younger generations. According to analysis cited by Yahoo Finance, the trend is being driven in part by boomers' mortgage and consumer debt. Visa U.S. Economic Insights estimates that boomers and other older Americans hold $4 trillion in mortgage and consumer debt, and it finds 41% of people aged 65 to 79 still have mortgages, as do 31% of Americans 80 and older. The report also says half of those older households spend more than 50% of their income on housing.
The debt burden also comes through credit cards, car loans, personal loans, and business loans, which becomes harder to manage after retirement as interest costs continue to build while incomes are fixed. The piece notes that nearly 44% of older Americans rely exclusively on Social Security for all of their income.
The Center for Retirement Research at Boston College estimates that about 40% of retirees do not have enough cash to cover unexpected expenses, even when drawing from retirement savings. Yahoo Finance reports that this dynamic can force younger generations to dip into their own savings, spend more of their income, or forgo employment opportunities to provide care.