A new survey indicates people are starting retirement with record amounts of debt, while counting on borrowing to cover expenses in retirement.

According to the Federal Reserve¬ís Survey of Consumer Finances, in 2010, 54% of pre-retirees and 41% of those 65-74 carried a mortgage on their home. The median amounts of these mortgages were $97,000 for pre-retirees and $70,000 for new retirees. 

An estimated 41% of pre-retirees and 32% of new retirees also had outstanding credit card balances (median balance approximately $2,200) and installment loans (median balance approximately $11,000).  An estimated 9% of pre-retirees and retirees faced debt payments that exceeded 40% of family income.

Housing appeared to be the key reason for the high levels of debt. Many homeowners during the housing bubble were led to think of their house as a cash machine - and thus they took on more mortgage debt during their working years and approached retirement with substantial housing debt.

Credit card debt also is increasingly a problem for older Americans. While overall outstanding credit card debt declined from the third quarter of 2008 to the first quarter of 2012, the deleveraging was much greater among younger households than older ones.  In fact, the percent of households 75 and older with debt rose from 18.8% in 2007 to 21.7% in 2010. In all other age brackets during that timeframe, card debt decreased. Statistics past 2010 were not available.

The overall deleveraging reflected changing behavior of consumers who were charging less on their cards and/or paying off more, tighter lending standards on the part of the companies, and the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, which increased the transparency and fairness of the credit card industry.   

The policy think tank Demos undertook surveys in 2008 and 2012 that highlight the changing pattern of indebtedness between those over and under age 50.  Of households with debt, those over 50 saw their average balances decline by 16% compared to a 37% decline for those under 50. 

Older households frequently used their credit cards to manage daily living expenses and to cover contingencies such as car and home repairs as well as medical expenses.

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