Data and Research March 19, 2018

Near-Retirees and New Retirees Have Higher Debt Than Older Generations

EBRI says more families are placing themselves at risk of running short of money in retirement due to their increased likelihood of holding debt while in retirement.

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Sixty-eight percent of families where the head of the household is 55 or older carried debt in 2016, up from 53.0% in 1998, the Employee Benefit Research Institute (EBRI) found.

In 2016, 77.1% of families with heads ages 55 to 64 held debt, compared to 70.1% of those with heads ages 65 to 74 and 49.8% of those with heads ages 75 or older.

However, EBRI found that the average total debt decreased from $82,968 in 2010 to $76,679 in 2016, and the median debt level also decreased, from $61,219 to $47,800. EBRI also learned that families with younger or more educated family heads, higher incomes and higher net worth carried significantly higher average and median debt levels.

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Debt for families with heads ages 75 or older increased from $30,288 in 2010 to $36,757, while those with heads ages 65 to 74 decreased from $78,319 to $65,686. Between 1992 and 2001, debt payments were approximately 9% of family income, but by 2010, they had increased to 11.2%. However, by 2013, that had declined to 10.0%, and by 2016, 8.2%. The older the family heads were, the lower the debt payments were as a percentage of income. For families with heads 55 to 64, that was 9.1%. for families with heads 65 to 64, 7.9%, and for families with heads 75 and older, 6.0%.

Families in the lowest income quartile were paying 16.4% of their income in debt payments in 2016, whereas families in the highest income quartile were paying only 6.2%.

The share of income that went to housing debt payments increased from 5.5% in 2001 to 8.3% in 2010, but then declined to 7.0% in 2013 and 5.7% in 2016.

Debt as a percentage of total assets for elderly (those with heads of household ages 65 and older) or near-elderly (those with heads of household ages 55 to 64) remained unchanged at 7.0% between 1992 and 1998, but declined to 6.5% in 2016.

The percentage of families headed by individuals younger than 55 with debt was 84.4% in 2016. EBRI says it appears that the percentage of families with debt peaks for those with family heads ages 35 to 54 and then tends downward for families with substantially older heads.

In conclusion, EBRI said that housing debt has been the main driver of debt for families with heads age 55 or older, while nonhousing debt has been relatively constant since 2001. In fact, the median amount of credit card debt with households headed by someone age 55 or older was $2,578 in 2013, and $2,500 in 2016.

However, American families just reaching retirement or newly retired are more likely to have debt—and higher levels of debt—than past generations. Consequently, EBRI says, more families that have elderly heads are placing themselves at risk of running short of money in retirement due to their increased likelihood of holding debt while in retirement.

EBRI’s full report, “Debt of the Elderly and Near Elderly, 1992-2016,” can be downloaded here.

Reader Responses March 19, 2018

SURVEY SAYS: March Madness Activities and Employee Morale and Productivity

You can find studies showing both that March Madness activities improve workplace morale and productivity or decrease it, and other studies say it cost employers money.

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Last week, I asked NewsDash readers, “Do you think March Madness activities in the workplace increase or decrease morale and productivity, and are these activities encouraged in your workplace?”

 

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Nearly half (48.9%) of responding readers indicated they think March Madness activities in the workplace affect employee morale in a positive way, while 31.1% said they affect morale in a positive way for some and a negative way for others. Only 2.2% said they affect morale in a negative way, and 17.8% believe they don’t affect employee morale.

 

As for employee productivity, 46.7% said March Madness activities in the workplace affect productivity in a positive way for some employees and in a negative way for others, while 31.1% reported they affect productivity in a negative way. Only 2.2% believe they affect employee productivity in a positive way, and 20% said they do not affect employee productivity.

 

More than two-thirds (68.9%) reported their company/boss neither encourages or discourages March Madness activities in the workplace, while 24.4% said activities are encouraged, and 6.7% said they are discouraged.

 

Most reader who chose to leave verbatim comments say such activities encourage camaraderie among employees and are a nice break. While loss in productivity is mentioned by several, a couple says that loss is made up immediately following March Madness. Editor’s Choice goes to the reader who said: “Isn’t March Madness caused by testing deadlines?”

 

A big thank you to all who participated in our survey!

 

Verbatim

I work for a group of 7 companies. We always have a March madness pool. Even employees who don’t know what a Basketball is like to get involved. Because it gets them involved and they love to join in. One of our companies was purchased by Berkshire Hathaway. And Mr. Buffet sent then all an email, you won’t believe how many employees are now involved; clueless employees asked me to help them do a pool. We have TV’s so we play the games without sound. Even clueless employees will stop and check the scores. The Pac. 12 let us down BOO!

Completing your brackets is HIGHLY encouraged when working at a Berkshire company! Too bad every employee was eliminated on the first round:(

“Encourages” is not the best word; they permit the emails that go out soliciting brackets.

My first inclination is to say, “What is March Madness?”, I then remind myself “oh yeah, it’s that basketball thing”. I’m not a fan.

While I appreciate that my morale is boosted, I’ve gotten absolutely nothing done in the last 2 days!

As an HR Puritan here in Boston I just roll my eyes, avert my gaze and let the madness happen.

No time for comments, gotta update my brackets and make sure I can live stream the games without getting caught!

Gone are the days when guys would bring in those little Walkman style tv’s! Now everyone just monitors (or watches) the games on-line!

Women are a majority in my work area and I see no effect. When I worked in male majority areas March Madness took up a lot of time.

Any time of year anymore seems to be our busy time of year, but right now more because we’re knee deep in RFPs. That however, did not stop us all from focusing on filling out our brackets after our last meeting of the day the other day to make sure we got our picks in on time. And, I might add, goal setting is due also, but well…that had to wait one more day! 🙂

If my workplace were declared to be a “March Madness Free Zone” I think it’d be time to look for a new workplace

The double entendres in urologists’ vasectomy ads are a bit more raunchy this March Madness!

It’s a bit of unifying fun for the whole company. Sure, some people work a bit less but overall the clients get taken care of and everyone will be right back at it on Monday.

The hit on short-term productivity is out-weighed by the increase in morale and improved camaraderie of the team, which boosts productivity in the long run.

It is fun to see who survives the brackets and the work still gets done.

Tracking results on the brackets can help build camaraderie, but it can be counterproductive when taken to extremes or when uninterested employees are pressured to participate. I don’t think employers should be providing prizes related to participation–those resources should be devoted to activities that are directly productive to the business.

Our office pool winner picks a charity that 10% of the pot is donated to. The other 90% is paid out to the 1st, 2nd and 3rd place finishers.

A nice diversion and fine with me as long as people remember to get their work done.

I think it depends on the industry you work in. I’ve worked at companies where it costs the company a lot of money in lost productivity. But in the non-profit I work for, almost no one even talks about it. I think it’s the difference in focus. We feed people. That seems much more important than sports to me. And to most of my co-workers

It has been a busy time of the year. Counting my blessings that there are no March Madness Activities this year…. And hoping that I did not delete an E Mail that says they events are starting today.

We feel that big events whether political, historical or even sports have an effect on our employees. We have tried to keep our employees in the know on things happening in our country. These things cost us in terms of lost productivity at the time, but we do think they pay rewards by making it a more friendly family oriented place to work. That keeps good employees employed with us and we feel they give us extra effort because of it.

This year we’ve been warned to keep tabs on the tourney via ‘personal devices’, instead of clogging the company network. My guess is that advisement won’t have much effect…

Perhaps I’m not in tune, but I don’t think March Madness is very prevalent in our workplace. Employees are more likely to talk about the weather!

Isn’t March Madness caused by testing deadlines?

Having an office pool sometimes help takes away the mundane of our everyday office life – every little bit of excitement helps! Go Villanova!

Bracket pools can build camaraderie in teams and typically doesn’t cause any issues.

I am not really too concerned about the impact. There are constant distractions and this is only one of them. We all need ways to “blow off steam” and sports of all kind are an avenue for that. Without these human activities taking us away from work for a few minutes, wouldn’t we just be robots instead of humans???

 

 

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Strategic Insight or its affiliates.

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