Boomers who looked into borrowing money on LendingTree, a popular online loan marketplace, saw their debt increase during the pandemic by an average of $8,848, or 6.7 percent.
The company's analysis of 340,000 anonymous credit reports from its users found that boomers’ indebtedness grew at a time when Gen Z, millennial and Gen X potential borrowers all reduced the amount they owe.
Millennials lowered their debt by an average of $9,117, while Gen Z members cut it by the biggest percentage, 17 percent. Boomers, however, started 2019 with $132,039 in debt but allowed that to grow to $140,887 by 2021.
The rise in what boomer loan shoppers owe seems to have been due mostly to mortgage debt, which grew from 69.6 percent of their total debt to 72.7 percent in 2021. That happened even as they saw proportional decreases in personal loans (down from 5.8 percent to 3.9 percent of their total debt), student loans (5.3 percent to 4.8 percent), credit cards (8.6 percent to 8.3 percent) and auto loans (10.6 percent to 10.3 percent).
Matt Schulz, LendingTree's chief credit analyst, said via email that it's unclear why the boomers in the survey have rising mortgage costs. He speculated that one explanation for increasing mortgage debt is that some boomers may have bought homes with higher prices as a result of lower interest rates. It also could be that some took mortgage-loan deferments during the pandemic but paid down other bills, leaving them with a higher percentage of mortgage indebtedness.
Taking on more debt in a still-volatile economy is risky, Schulz cautioned. “Your best move — especially for boomers, who are more likely than others to be on a fixed income — is to keep paying down that debt, keep building that emergency fund, and keep strengthening your financial foundation to weather whatever storm might come next."
5 smart ways to deal with debt
Wrestling with debt can be expensive and stressful. Take these five steps to tackle yours.
- Start with your highest-interest debt. Try the avalanche method. Pay as much as you can on your highest-yielding debt each month and pay the minimum on your lower-cost debt. Once your high-interest card is paid off, turn your attention to your lower-cost cards.
- Consolidate debts. Get a loan from a bank or credit union to pay off your high-interest debts.
- Make an extra mortgage payment each year. You'll drastically reduce the term of the loan and the amount of interest you pay over the course of the loan.
- Start an emergency savings fund. If you put $25 a week into a savings account, you'll have $1,000 in 10 months. If you need new tires, you can pay cash instead of charging it.
- Use AARP's Money Map to help you manage unplanned expenses, pay off your debt or save for a rainy day. It's free, and you don't have to be an AARP member to use it.
Patrick J. Kiger is a contributing writer for AARP. He has written for a wide variety of publications, including the Los Angeles Times Magazine, GQ and Moth.