Implications of the “Graying” Debt of America’s Baby Boomers

What age group makes up the largest segment of debtors in the U.S. population? According to a recent article in TheStreet.com, members of the Baby Boomer generation appear to have taken on the most consumer debt over the last several decades while Millennials, in large part, have shied away from large-scale consumer lending (including smaller automobile loans and larger mortgages for home purchases). In some cases, the fact that Americans in the Millennial generation have not taken on a substantial part of the consumer debt load may have to do with the amount of student loans that many owe, preventing them from getting a mortgage, for instance.
What do these two age groups have in common? Both younger adults and aging Americans make up the two largest segments of the population, but their debt loads seem to be strikingly unequal.
Baby Boomers Incurring the Larger Portion of America’s Consumer Debt
The article cites a recent report from the New York Federal Reserve Bank entitled “The Graying of American Debt.” That report indicates that, “as the number of Americans both reaching older ages and entering adulthood climbs, we may expect higher aggregate debt balances in the hands of both older and younger borrowers.” However, such predictions do not seem as if they will come to fruition given the current makeup of consumer debtors. The report underscores that it has found “ample evidence of increased debt balances among older borrowers and no evidence of increased balances among the young.”
In short, Millenials do not appear to be as likely to borrow as adults in older generations. Over the last decade or so, the data has shown no noticeable shift toward debt accumulation among Americans in their late 20s and early 30s. For instance, in 2003, the Federal Reserve determined that Americans between the ages of 40 to 45 had more debt than those in any other age group (over $300 billion). By 2015, that number had not changed very much, as the average age for the peak amount of consumer debt was listed at 42 years old.
Lower Credit Scores Among Millennials
Is the issue that Millennials simply do not want to take on consumer debt? Or are Americans in that generation having more difficulty obtaining credit? According to the article, a large portion of those Millennials are already in debt, but it is largely related to student loans. Millennials also have, on average, significantly lower credit scores than adults between the ages of 50 and 75.
For instance, the average FICO credit score for Americans between 50 and 75 was “just under 800,” while the average FICO credit scores for Americans between the ages of 23 and 35 was “between 620 and 675.” If you have a credit score of 650 below, the article indicates that creditors see you as having “significantly damaged credit histories,” while even a score between 650 and 690 often is seen as “a problem credit score.”
Some commentators worry about the potential for growth if Millennials do not improve their financial histories and begin taking on consumer debt for automobiles and homes. In the meantime, if you have questions about dealing with consumer debt or filing for bankruptcy, an experienced Oak Park consumer protection lawyer can help. Contact the Emerson Law Firm today.

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