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We use data from the 2015 National Financial Capability Study to analyze debt close to retirement. We show people carry many types of debt late in their lifetimes, and these types of debt are differently linked to measures of financial distress such as having too much debt or being unable to face a financial shock. Accordingly, it is important to be able to disaggregate debt to investigate reasons why individuals carry debt close to retirement. We show that lack of financial literacy, lack of information, and behavioral biases all help explain the prevalence of debt later in life. Our evidence indicates that debt at older ages can may negatively influence retirement wellbeing.
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The content is solely the responsibility of the authors and does not necessarily represent official views of the TIAA Institute or Wharton School’s Pension Research Council/Boettner Center. ©2018 Lusardi, Mitchell, and Oggero. All rights reserved.
Date Posted: 06 February 2019