What is The Average Debt By Age?
Consumer debt is any personal debts that are taken out for the purpose of purchasing household goods. Examples of consumer debt include mortgages, credit card debt, student loans, and personal loans. Total consumer debt in America has now reached more than $14 trillion. How did we get in this state?
The truth is that getting into debt is really simple. Finding yourself drowning in debt is even easier. Pretty much everyone is one wrong decision, one late payment, one job loss or missed work day from being in debt. It really is no respecter of persons.
However, there are some trends and some age indicators that point to more debt than with others. In this article, we are going to take a look at the average debt by age along with reasons that go along with it.
Average Debt By Age: Total Household Debt
Let’s start with the over average debt by age: total household debt. This includes all consumer debt types that a household may have. As we look at the numbers in different categories, it is important to note that they are averages. One household may have a much higher or much lower level of debt. At last check, the following indicated the overall household debt by age:
- Generation Z (18-23) - $9,593
- Millenials (24-39) - $78,396
- Generation X (40-55) - $135,841
- Baby Boomers (56-74) - $96,984
- Silent Generation (75 & Up) - $40,925
As you can see, Generation X has the highest level of overall debt. This is not an unreasonable fact, though, considering the age group. Those between the ages of 40 and 55 tend to have a higher number of homebuyers, meaning that they have more mortgage debt than most other age groups. Additionally, Generation X, at this time, have more children who are currently in college or preparing to go to college.
Generation Z includes the age group that is just starting out. Most of them do not have much credit available to them as they do not yet have a stable credit history to use for new credit. Many have not yet graduated from college, so their student loans are often lower. And many of them have not purchased a home yet, meaning there are fewer mortgage loans. You see all of this increases as we move into the next generation.
Baby Boomers have less than Generation X and the Silent Generation has even less. This is likely because these groups have paid off much of their mortgage loans and student loans.
Average Debt By Age: Student Loans
Next, we are going to take a look at student loans. We all know that the student loan crisis has been a popular topic in recent months. And, well, it is hard not to talk about it considering America has reached an all time high of about $1.76 trillion- that is a lot to talk about.
Unfortunately, it is not just recent college grads that are buried in student loan debt- it is every age group. Here is the average debt by age when it comes to student loans:
- Under 24: $110 billion - 7.6 million borrowers
- 25 - 34: $500 billion - 14.9 million borrowers
- 35 - 49: $622 billion - 14.4 million borrowers
- 50 - 61: $282 billion - 6.4 million borrowers
- Over 62: $98 billion - 2.4 million borrowers
There are a couple of reasons that those under 24 have one of the lowest student loan debt averages, beat only by those over 62. The first of these reason is student loan interest. Most recent grads have yet to experience the full force of interest as the other age groups have. Their loans are still fairly fresh, meaning that they have not racked up years of interest just yet.
The second potential reason for this is that learning opportunities have expanded over the years. There are now online classes, most being more affordable than on campus classes. There are also ways to earn certifications through places such as Coursera, which charges much less than traditional college while still helping learners improve their careers. Though there could be many other possible influences on the loan level of those under 24, these two reasons definitely have an impact.
Those in the 35 – 49 year range have the highest student loan debt. This is likely because their loans have gained a lot of interest over the years while they were trying to build their careers and making other life altering decisions, such as buying homes and raising families.
We suddenly see a more than 50 percent drop when we reach the ages of 50 and 61. We can start by assuming that the principal amount borrowed when they attended school was likely much lower as college tuition was lower. There may, however, be other factors to consider.
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For one thing, this is the age group that is getting ready to retire, so there is a good chance they are making a big push toward paying off their debt. They may also qualify for some of the loan forgiveness programs, helping them decrease the amount that they owe.
There is also the fact that this age group has probably climbed the career level to a high enough point that they could afford loan payments. While this is not always the case, many people in this age group have been settled into their careers, gotten a few promotions, and earned a few raises. Those that have reached this level have had more opportunities to lower their student loan balance.
Average Debt By Age: Credit Card Debt
Credit card debt is just another large piece of the American debt pie. It makes up about $829 billion of the country’s consumer debt. Experian studied credit card debt of those from ages 20 all the way to 99. They found the following average debt by age:
- 20s - $2,709
- 30s - $5,563
- 40s - $7,922
- 50s - $8,364
- 60s - $6,832
- 70s - $5,250
- 80s - $2,990
- 90s - $1,433
According to the study, 51 year old consumers have the highest level of credit card debt, averaging at about $8,658. 50 and 52 year olds followed directly behind while 98 years olds have the lowest average. The overall average credit card debt in America is $6,194, but those from ages 40 to 69 were found to consistently have higher debt than that national average.
Though there is always a wide range of reasons for people to use credit cards, it is still important to note that those ages 40 to 69 are those who are still in the process of raising children, paying for college tuition, possibly carrying some of the cost of their kid’s weddings, and spoiling their grandkids.
We must also take into account the number of divorces that occur throughout those age groups. None of those things are cheap. Therefore, it is no surprise the those in this age range regularly have such high levels of debt.
Average Debt By Age: Mortgage Debt
A home purchase is often the most expensive purchase a person makes, and that is the case across all ages. The mortgage average debt by age does fluctuate some, but it is high among all:
- Generation Z- $192,276
- Millennials- $255,527
- Generation X- $259,1004
- Baby boomers- $198,203
- Silent Generation- $163,254
The mortgage debt among Generation Z is only higher than the Silent Generation. Millennials and Generation X have all other groups beat. Let’s start by stating this fact: Those two age groups are full of people who opted to move up north, where real estate is generally more expensive.
We have seen the Gen Z crowd moving south instead. Additionally, Millennials and Gen Xers have a higher number of people refinancing their mortgages for higher amounts and even taking out a second mortgage to invest in real estate.
Though Generation Z is moving to the more affordable south, they are also putting the lowest down payments on their homes at only 5 percent. Their overall mortgage debt would be much lower if the beat or even met the down payment of 8.5 percent that is common among Millennials.
When we reach the Baby Boomer age, we start seeing a drop in the mortgage debt. This is likely because of two reasons. First, many bought homes when they were at a lower price, so the amount they borrowed was lower. Additionally, they have- theoretically- been paying their mortgage payments longer, meaning they have probably paid off much of their debt.
The Silent Generation has had even longer to repay their mortgage. It would seem normal to believe that this generation would have paid off their mortgage entirely or even mostly. Unfortunately, their average mortgage debt is still terribly high and may not even be paid off before they pass.
Average Debt By Age: Auto Loans
Auto debt makes up about $1.2 trillion, or 9.5 percent, of consumer debt. About $51 billion in auto loans is originated every single month with an average monthly car payment of $550 per month. This breaks down into the following average debt by age:
- Generation Z - $19,223
- Millenials (24 - 39) - $23,045
- Generation X (40 - 55) - $25,764
- Baby Boomers (56 - 74) - $20,736
- Silent Generation (75 & Up) - $15,412
Younger generations have not had the same amount of time to build up their credit history and many have yet to learn how to manage money properly. Therefore, it makes sense to assume that their credit scores are not that high on average. Though there are sure to be other factors affecting the number of loans per age group, credit scores definitely play a part.
Getting Out of Debt
If you are anything like me, you probably do not like the look of these numbers. When I found out that my first child was on the way, I knew it would not be cheap. The second, third, and fourth children would be no different, but that was okay. I planned to enjoy my children every second I could, send them out into the world when it was their time to fly, and then retire at my time financially stable. That would be a dream come true.
Looking at these statistics and age ranges, though, can be pretty depressing. If I follow suit and become a statistic, my dream will not happen, and that is just not okay with me. None of us want to still be in debt in our 90s, and we definitely do not want to leave debt behind for our loved ones to deal with. But how can we avoid it?
There is no very simple way- it all comes down to making and following an effective debt repayment plan. Right now- no matter your age- you should take stock of the debt in your life and figure out how to get rid of it quicker than you have been. This may sound easier said than done but it is very possible.
Make a list of your debts and then take a look at your budget. How much can you comfortably afford to pay toward your debt at this time? Is that enough to put a good dent into your debt and get it paid down before you are ready to retire?
If the answer to that question is no, you will need to find a way to increase the money you have coming in. This may be through a second job or a side hustle. You should also speak to each of your creditors to determine if they will settle for a lower amount than what you owe. Many are more than happy to work with you as they would rather get back some of their money than none at all.
Consider a Debt Settlement Company
If you do not feel that you can handle it on your own or you simply do not have the time, you can pay a debt settlement company for you to do it for you. Be sure to check the reviews of any such company first, though. You want to be sure that you hire someone who can actually get results.
Also, you should consider getting a debt consolidation loan. Add up your total debts and aim to borrow that amount. You can then pay off multiple debts while opening only one. Most personal loans will charge much lower interest than credit cards and other debt. They also add that interest into the total of the loan, so every payment you make is actually going toward your full balance. Do be sure to check for settlement offers on your debts first, though, as you might be able to save a lot of money.
Conclusion
Debt has become more and more commonplace over time. Nowadays, not having debt makes you the exception to the rule, and that is a bit scary. Hopefully, by looking at these statistics, you see the importance of repaying your debt as quickly as you possibly can. If you need to, reach out to a financial advisor or a debt counseling agency to help you make an action plan.