You might think that baby boomers (born between 1946 and 1964 according to Pew Research Center) would be past their debt-carrying years. After all, more than 28 million boomers retired in 2020, a major increase compared to previous years, due in part to the coronavirus pandemic. Unlike younger generations, who are still working, covering child-care expenses and buying homes at higher rates, today’s retirees are trying to navigate how to live off of their savings and investments during a time when the stock market is particularly volatile.
But not everyone who retires does so debt-free, however ideal it may sound. Recent data from the Federal Reserve shows that older consumers are carrying debt well into retirement, including mortgages, car loans, personal loans and even credit card balances.
So how is all that debt impacting the average boomer’s credit score? According to Experian’s 2020 State of Credit report, the average boomer has a 716 VantageScore®, which is considered to be good and/or prime.
Boomers carry an average credit card balance of $6,747 and $25,812 in total nonmortgage debt (including credit cards, store cards, personal loans and other nonmortgage accounts). They have a 3.2% delinquency rate for accounts 90 to 180 days past due.
Boomer homeowners carry an average mortgage debt of $191,650.
Here’s a full break down of Experian’s 2020 findings by generation:
2020 State of Credit Findings
| 2020 findings by generation | Gen Z (ages 24 and younger) | Millennials / Gen Y (ages 25 to 40) | Gen X (ages 41 to 56) | Boomers (ages 57 to 74) | Silent (ages 75 and above) |
|---|---|---|---|---|---|
| Average VantageScore® | 654 | 658 | 676 | 716 | 729 |
| Average number of credit cards | 1.64 | 2.66 | 3.3 | 3.45 | 2.78 |
| Average credit card balance | $2197 | $4651 | $7718 | $6747 | $3988 |
| Average revolving utilization rate | 30% | 30% | 32% | 24% | 13% |
| Average number of retail credit cards | 1.64 | 2.1 | 2.59 | 2.63 | 2.21 |
| Average retail credit card balance | $1124 | $1871 | $2353 | $2100 | $1558 |
| Average non-mortgage debt | $10942 | $27251 | $32878 | $25812 | $12869 |
| Average mortgage debt | $172561 | $232372 | $245127 | $191650 | $159517 |
| Average 30–59 days past due delinquency rates | 1.60% | 2.70% | 3.30% | 2.20% | 1.20% |
| Average 60–89 days past due delinquency rates | 1.00% | 1.50% | 1.80% | 1.20% | 0.70% |
| Average 90–180 days past due delinquency rates | 2.50% | 4.40% | 5.30% | 3.20% | 1.90% |
How to get out of debt
Baby boomers may feel more pressure than younger generations to pay off their accounts before old age, especially if you’re planning to live on a more limited income of Social Security and retirement savings.
If debt keeps you up at night, start to make a plan to pay it off. Start by pulling your free credit report and sign up for a free credit monitoring service so you have a clear picture of just how much you owe.
CreditWise® from Capital One shows an overview of all your credit card and loan balances, and it’s available to anyone whether they have a Capital One credit card or not. An alternative is Experian free credit monitoring, which is helpful for tracking your balances as you devise your debt payoff plan.
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With mortgage rates at a historic low, it’s important to remember that not all debt is created equal. If you feel overwhelmed by your various debts, start by tackling the highest-interest debt first and find ways to lower the APR on other balances. You could consider refinancing your home to save on your mortgage payment, or look into a balance transfer credit card so you can pay your credit cards off interest-free for a period of up to 20 months.
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One low-cost way to get out of debt is to complete a balance transfer. Move debt from high-interest credit card(s) over to one that offers no interest for a certain length of time. You’ll pay a small fee (usually 3% of the balance), but you’re bound to save a lot more than you would pay in interest charges.
Balance transfer cards often have set maximum limits on how much debt you can transfer, so make sure to read the fine print before you apply. You also can’t complete a transfer between cards issued from the same bank.
You’ll need good or excellent credit (scores 670 and greater) to be a competitive applicant for balance transfer cards, especially during the current pandemic when many financial institutions have tightened their lending. The average baby boomer is well within this credit score range, but every application is evaluated individually and there are no guarantees for approval. Check your odds of getting approved ahead of time if you’re concerned.
