House payments that don't retire
The shadow of a house key falls over a mortgage application form.
Jeff J Mitchell | Getty Images
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Audio transcript
CHRIS FARRELL: Mortgages make up about 70% of household debt, and we're told to pay off that debt before retiring. But over three decades, data shows more people are still paying their home loans after retirement, and what is owed has increased dramatically. Here's the latest in my series, Buy Now, Pay Later.
[MUSIC PLAYING]
For homeowners, the dream of getting rid of the mortgage and saying goodbye to colleagues for the last time were once closely linked. The bond is best captured by the image of mortgage burning parties popular in the '50s and '60s. The television show Mayberry RFD, in 1969, aired an episode called "Emmett's Retirement." Emmett gathers some neighbors in his handyman shop. In one hand is a blowtorch. His other hand holds his bank mortgage statement.
[AUDIO PLAYBACK]
- Gentlemen, you are now witnessing that great American ceremony known as burning the mortgage.
- No kidding? Oh, that's great, Emmett.
- Yeah.
- Yeah. That little old house is now all free and clear.
[END PLAYBACK]
CHRIS FARRELL: Emmett tells his friends he can now retire and go fishing. Mortgage burning parties are something of a relic. Over the past three decades, the share of homeowners ages 65 to 79 with a mortgage rose from 24% to 41%, while median mortgage debt surged by 400%. That's according to the Joint Center for Housing Studies at Harvard University.
Among homeowners 80 years and older, the numbers are even more dramatic. The share with mortgages jumped from 3% to 31%, and median mortgage debt increased by 750%.
JENNIFER MOLINSKY: For a lot of people, I think this isn't a choice. It isn't a financial strategy. It's more of a reality.
CHRIS FARRELL: Jennifer Molinsky is director of the Housing and Aging Society program at Harvard's Housing Center. Her insight is echoed by Linna Zhu, research analyst at the Urban Institute.
LINNA ZHU: For wealthier homeowners, maybe carrying a mortgage debt might be a strategic choice, but for many, most of the senior or older adults who are living on fixed incomes, it's not a strategy. It's a necessity. So the stress of housing debt in retirement is real and growing.
CHRIS FARRELL: The number of so-called cost-burdened older adults is at an all time high. That means they are spending 30% or more of their income on housing, utilities, taxes, and insurance. Jennifer Malinski.
JENNIFER MOLINSKY: 97% of older owners with mortgages who are lower income, have an income under $25,000, are cost burdened, meaning they're paying more than 30% of their income for housing.
CHRIS FARRELL: Older cost-burdened homeowners are at financial risk. Amalie Zinn of the Urban Institute says they're vulnerable to unexpected expenses.
AMALIE ZINN: There could be a health shock. There could be an issue with their home, especially as they're living in homes that maybe they haven't renovated in a while, or they've been in that home for 30 years or so or 25 years paying off that mortgage. And they're going to need to cover a roof repair or fix an AC unit. There could be a flood or a storm, especially with increased climate change and severe climate catastrophes and events.
CHRIS FARRELL: The mortgage debt story mirrors the broader trend toward more older adults entering retirement in debt. Debt repayments can hike financial stress and vulnerability, especially for those of modest means. The struggle to cover debts leaves them with less money for essentials like food, health, and home maintenance, let alone fun.
The Buy Now, Pay Later series is in partnership with Next Avenue, a nonprofit news platform for older adults, produced by Twin Cities PBS.
[MUSIC PLAYING]
For homeowners, the dream of getting rid of the mortgage and saying goodbye to colleagues for the last time were once closely linked. The bond is best captured by the image of mortgage burning parties popular in the '50s and '60s. The television show Mayberry RFD, in 1969, aired an episode called "Emmett's Retirement." Emmett gathers some neighbors in his handyman shop. In one hand is a blowtorch. His other hand holds his bank mortgage statement.
[AUDIO PLAYBACK]
- Gentlemen, you are now witnessing that great American ceremony known as burning the mortgage.
- No kidding? Oh, that's great, Emmett.
- Yeah.
- Yeah. That little old house is now all free and clear.
[END PLAYBACK]
CHRIS FARRELL: Emmett tells his friends he can now retire and go fishing. Mortgage burning parties are something of a relic. Over the past three decades, the share of homeowners ages 65 to 79 with a mortgage rose from 24% to 41%, while median mortgage debt surged by 400%. That's according to the Joint Center for Housing Studies at Harvard University.
Among homeowners 80 years and older, the numbers are even more dramatic. The share with mortgages jumped from 3% to 31%, and median mortgage debt increased by 750%.
JENNIFER MOLINSKY: For a lot of people, I think this isn't a choice. It isn't a financial strategy. It's more of a reality.
CHRIS FARRELL: Jennifer Molinsky is director of the Housing and Aging Society program at Harvard's Housing Center. Her insight is echoed by Linna Zhu, research analyst at the Urban Institute.
LINNA ZHU: For wealthier homeowners, maybe carrying a mortgage debt might be a strategic choice, but for many, most of the senior or older adults who are living on fixed incomes, it's not a strategy. It's a necessity. So the stress of housing debt in retirement is real and growing.
CHRIS FARRELL: The number of so-called cost-burdened older adults is at an all time high. That means they are spending 30% or more of their income on housing, utilities, taxes, and insurance. Jennifer Malinski.
JENNIFER MOLINSKY: 97% of older owners with mortgages who are lower income, have an income under $25,000, are cost burdened, meaning they're paying more than 30% of their income for housing.
CHRIS FARRELL: Older cost-burdened homeowners are at financial risk. Amalie Zinn of the Urban Institute says they're vulnerable to unexpected expenses.
AMALIE ZINN: There could be a health shock. There could be an issue with their home, especially as they're living in homes that maybe they haven't renovated in a while, or they've been in that home for 30 years or so or 25 years paying off that mortgage. And they're going to need to cover a roof repair or fix an AC unit. There could be a flood or a storm, especially with increased climate change and severe climate catastrophes and events.
CHRIS FARRELL: The mortgage debt story mirrors the broader trend toward more older adults entering retirement in debt. Debt repayments can hike financial stress and vulnerability, especially for those of modest means. The struggle to cover debts leaves them with less money for essentials like food, health, and home maintenance, let alone fun.
The Buy Now, Pay Later series is in partnership with Next Avenue, a nonprofit news platform for older adults, produced by Twin Cities PBS.
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