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Money Management

Here’s How Much Money the Average American Owes by Age

By August 28, 2023No Comments

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Household debt in the U.S. has reached an all-time high, but one age group has the highest debt of all groups. Read on to find out which one. 

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Debt is an increasingly significant problem that affects people of all ages in the United States. From auto loans to mortgage repayments, debt has become a way of life for most Americans, and it can be a struggle to keep up. Total household debt has reached an all-time high. Read on for a breakdown by age group and type of debt.

Total debt at all-time high

Based on the data amassed by the Federal Reserve Bank of New York’s Center for Microeconomic Data for Q2 2023, American households collectively hold a remarkable $17.06 trillion in debt. This notable rise in debt, almost $3 trillion since the end of 2019, has impacted individuals across all age groups. The age group with the highest debt is 40 to 49, totaling $4.38 trillion, followed by the 50-to-59 age group and the 30-to-39 age group. Conversely, the age group with the least amount of debt is the 18-to-29 age group.

Age Group Total Debt Q2 2022 Total Debt Q2 2033 Difference 18-29 $1.09 trillion $1.13 trillion +3.11% 30-39 $3.55 trillion $3.75 trillion +5.46% 40-49 $4.11 trillion $4.38 trillion +6.69% 50-59 $3.61 trillion $3.78 trillion +4.71% 60-69 $2.38 trillion $2.54 trillion +6.56% 70+ $1.40 trillion $1.48 trillion +5.56%
Federal Reserve Bank of New York’s Center for Microeconomic Data

When comparing pre-pandemic debt trends (Q4 2019), individuals aged 70 and above have experienced the most significant increase, with their debt surging by more than 30%. This is followed by a 25% increase in debt for individuals aged 30-39, and a 19% increase for those aged 60-69. The lowest rise in debt is for individuals aged 18-29 at 8.15%, while those aged 50-59 experienced a 16% increase.

Type of debt by age group

The types of debt that each generation carries vary significantly. For those aged 30 and higher, mortgages are the leading source of their debt, accounting for nearly three-quarters of it.

Type of debt by percentage Age Group Age Group Age Group Age Group Age Group Age Group 18-29 30-39 40-49 50-59 60-69 70+ Auto Loans 18% 10% 9% 9% 8% 7% Credit Card 6% 5% 5% 6% 7% 9% Mortgage 44% 69% 74% 73% 73% 73% HELOC 0% 1% 2% 2% 3% 5% Student Loans 28% 13% 8% 6% 5% 2% Other 3% 2% 3% 3% 4% 4%
Federal Reserve Bank of New York’s Center for Microeconomic Data

While mortgages are the leading source of debt of all age groups, the number of mortgage originations have dropped considerably since reaching its height in Q3 2021. With the rise in interest rates and home prices, the number of new loans have dropped by approximately 65%.

On the other hand, auto loan balances and originations have continued their upward trajectory, a trend that has been consistent since 2011. Similarly, credit card debt has also risen. Among different debt categories in this quarter, credit card balances and delinquencies changed the most compared to other types of debt, following a period of remarkably low delinquency rates during the pandemic.

Delinquency rates, which measure how often people don’t pay their bills on time, got a bit worse but are back to the same level as before the pandemic started. Additionally, credit card balances showed a rapid growth in the second quarter.

How to pay down your debt fast

If you want to take your own debt balance down, the first step is to create a plan. This plan should include a budget that details how much money you have coming in each month versus how much you have going out. From there, determine which debts have the highest interest rates and focus on paying those off first.

You might consider consolidating your debts into a loan with one monthly payment with a lower interest rate. Another helpful tip is to cut back on unnecessary expenses, such as eating out or purchasing non-essential items. Remember, paying down debt takes time and dedication, but with a solid plan in place, it’s possible to achieve financial freedom. Don’t be afraid to seek help from a professional advisor or debt counselor if needed. Your financial future is worth the effort.

Debt is often regarded as a necessary aspect of life. However, the consequences of being in debt can be severe, especially if there is a lack of financial planning and oversight. Ignoring your debt can lead to lower credit scores, difficulty securing future loans with low interest rates, bankruptcy, or even foreclosure. Additionally, excessive debt can cause mental and emotional stress that may affect other areas of your life.

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