A generation ago, many Americans worked toward paying off their mortgages and retiring with little, if any, debt. Today, a growing percentage of older workers are heading in the opposition direction. Sizable household debt is becoming more commonplace as people head into their retirement years, meaning that many might also be heading into a less-than-rosy future.

A study released Thursday by the nonprofit Employee Benefit Research Institute found that 55 percent of families headed by pre-retirees ages 55 to 64 had housing debt in 2007, up from 41 percent in 1992. Among families headed by people ages 65 to 74, some 43 percent had housing debt in 2007, up from 18 percent in 1992.

Credit card debt was also mounting as older Americans used their cards to pay for basic necessities and make other purchases, the report said. Half of all households headed by pre-retirees had credit card debt in 2007, compared with 37 percent in 1992.

“These results are troubling as far as retirement preparedness is concerned, in that American families just reaching retirement or newly retired are more likely to have debt—and significantly higher levels of debt—than past generations,” Craig Copeland, EBRI senior research associate, wrote in the study. “Consequently, even more near-elderly and elderly families are likely at risk for severe changes in lifestyle after retirement.”

The recession and retirement plans

A separate study examined how older Americans’ finances changed from the start of the recession to February 2009. In that period, the share of boomers who reported consumer debt of $25,000 or more rose from 29 percent to 38 percent, while those who owed at least $50,000 rose from 12 percent to 22 percent.

That study, called “Debt: The Detour on America’s Road to Retirement,” was released in May by the Securian Financial Group in St. Paul, Minn.

Unmanageable credit card debt doesn’t just jeopardize Americans’ quality of life in retirement. It was also listed as the top reason why older people filed for personal bankruptcy protection last year, followed by a reduction in income and unexpected expenses, says Leslie Linfield, executive director of the nonprofit Institute for Financial Literacy in Maine.

Of about 45,000 people who sought bankruptcy protection, 49 percent were age 45 or older, she says. The institute’s data came from people in mandatory credit counseling or debtor education classes, both of which are required in bankruptcy filings.

Not surprisingly, the number of people of all ages seeking bankruptcy protection is rising, according to the American Bankruptcy Institute in Alexandria, Va. In the second quarter of this year, 365,059 people filed for bankruptcy, up from 266,767 people over the same period last year. The total through Sept. 30 was 1,046,449. There was no breakdown by age group.

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