What is the Age of Reason
By: Sumit Agarwal, John C. Driscoll, Xavier Gabaix, and David Laibson
Source: Center for Retirement Research at Boston College
From the introduction:
Most U.S. households have accumulated significant assets by retirement, but these assets are often accompanied by significant liabilities. Including net home equity, households with a head age 65-74 had a median net worth of $239,400 in 2007, according to the Survey of Consumer Finances (SCF). At the same time, the SCF reports that 48 percent had debt secured by a residential property, 26 percent had installment loans, and 37 percent carried credit card balances from month to month. Overall, about two-thirds of these households had at least one form of debt. This brief raises the question of whether older households have the ability to manage their increasingly large and complex balance sheets.