Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



Poor financial capability can erode well-being in later life. To explore debt and debt management among older Americans, age 51-61, we designed and analyzed a new module in the 2018 Health and Retirement Study along with information from the 2018 National Financial Capability Study. Even though this group should be at the peak of their retirement saving, it nevertheless carries debt due to student loans and unpaid medical bills; having children also contributes. By contrast, the financially literate have more positive financial perceptions and behaviors. Specifically, being able to answer one additional financial literacy question correctly is associated with a higher probability of reporting an above average credit record and planning for retirement. Higher financial literacy is also linked to being less likely to carry excessive debt, being contacted by debt collectors, and carrying medical debt or student loans, even after accounting for a large range of demographics and other characteristics. Evidently, financial knowledge can help limit debt exposure at older ages.


Retirement, debt, medical bills, student loans, mortgages, financial literacy, financial fragility

JEL Code

G40, G41, G51, G53, H31

Working Paper Number


Copyright/Permission Statement

This project received funding from the TIAA Institute and the Wharton School’s Pension Research Council/Boettner Center. The content is solely the responsibility of the authors and does not necessarily represent the official views of the above-named institutions. ©2020 Lusardi, Mitchell, and Oggero. All rights reserved.


We thank participants in the June 2020 TIAA Fellows Symposium and the 2020 Academic Research Colloquium for Financial Planning and Related Disciplines, Alexandria, VA, for suggestions and comments.

Included in

Economics Commons



Date Posted: 13 February 2020