According to a new study from the National Center for Policy Analysis (NCPA), “How Are Baby Boomers Spending Their Money?,” many are not saving enough for retirement.
Among those ages 55 to 64, mortgage interest was a major factor in increased housing costs, making up a larger share of expenditures now – 6.3% compared with 4.3% – than for this age group 20 years ago, despite fallen interest rates.
“Unfortunately, a greater percentage of pre-retirees will be dragging mortgage debt into their retirement years,” said National Center for Policy Analysis (NCPA) Senior Fellow Pam Villarreal. “This is a time when major debts should be pared down. Instead, many are taking out longer mortgages and home equity loans, spending more on interest payments and are, overall, buying too much house.”
Education expenditures have also increased – up 80% for 45- to 64-year-olds and 22% for those 55 to 64 – in part due to Boomers covering the loans of their adult children. Two in five have paid off their children’s debts, including 29% who paid student loans. Among parents whose children are older than 18, 59% reported providing financial support to adult children who are no longer in school, covering expenses such as transportation costs (41%) and medical bills (28%).
The study is available here.