The Complex Story of American Debt

Liabilities in family balance sheets

Report July 29, 2015 Read time:

Projects: Financial Security and Mobility

QUICK SUMMARY

Over the past 30 years, American families have taken on increasing amounts of debt. The growing use of credit among American households, particularly following the Great Recession, has different implications across generations. Although most households have more assets than debt, 80 percent hold some form of debt and that can signal economic opportunity and potential trouble. For example, accruing some debt at an early age can encourage wealth-building, but too much debt later in life can increase financial insecurity. This report provides a comprehensive look at the complex story of American debt—how families hold it, their attitudes toward it, and how it relates to their overall financial health.

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Key Findings

8 in 10 Americans have debt, with mortgages the most common liability.

Although younger generations of Americans are the most likely to have debt (89 percent of Gen Xers and 86 percent of millennials do), older generations are increasingly carrying debt into retirement.

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7 in 10 Americans said debt is a necessity in their lives, even though they prefer not to have it.

A generational divide in attitudes toward debt is emerging, with younger Americans being more debt-averse.

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2X The amount of mortgage debt that Gen Xers had in their 30s compared with baby boomers at the same age.

During the runup in housing prices before the Great Recession, Gen Xers were in their prime homebuying years, leading to higher mortgages for this generation.

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2X The likelihood that the silent generation views loans or credit cards as opportunity-enhancing compared with Gen X.

Attitudes about debt are influenced by stage of life. The silent generation (born between 1928 and 1945) are twice as likely as many younger Americans to view debt as having expanded their opportunities.

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