Banking & Finance and Government

State’s population is aging faster and with greater debt

Northwest Michigan, home to many retirees, is example of the imbalance.

November 8, 2019
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Michiganders are getting older, and they’re likely to owe more money than ever.

“The area is graying,” said Rep. Jack O’Malley, R-Lake Ann, whose district encompasses northwest Michigan, where many retirees flock. “We’ve got a lot of retirees moving in.”

Indeed, the Area Agency on Aging of Northwest Michigan projects that by 2022, seniors will comprise just over one-third of the total population in northwest Michigan.

According to the U.S. Census Bureau, seniors nationwide will outnumber children by 2035 — a first in U.S. history. Nationwide, Michigan is aging the fastest.

In 1990, seniors encompassed 12% of the state’s total population. In 2017, that number rose to nearly 17%.

Leelanau County’s senior population in 2010 was 31% of total residents. In 2022, the aging agency projects the senior population to rise to 44%.

Similarly, nearby Antrim County expects an increase from 30% to 39% and Grand Traverse County from 22% to 30%.

As their numbers grow, seniors also have substantially more debt, according to a recent Congressional Research Service report that measured the rise between 1989 and 2016.

The number of seniors nationally who held any debt in that period increased by 38% alone, reports the agency, which provides nonpartisan policy recommendations for Congress.

Mortgage debt is the main contributor, the study said. Growth in average debt secured by a residence swelled from $12,970 to $57,943 in 2016.

Not a lot of people are talking about it. In northern Michigan, the debts that seniors hold isn’t a common topic, said April Missias, Leelanau County’s senior services director.

“A number of seniors have mortgages on their homes or car payments, but that’s the extent of the conversation as it relates to debt,” she said.

Her agency gathers asset and income data to verify if seniors qualify for in-home services, respite care and financial assistance. But that information doesn’t include the debts they owe, Missias said.

While the number of seniors is rising, it doesn’t correlate with the number receiving assistance from senior services, she said.

“It’s a hard number to tell,” she said. “Every year, it fluctuates.”

The Congressional Research Service report also found seniors’ debts are climbing in relation to their assets. The debt-to-asset ratio among elderly households increased from 5% to 9%.

That means the country’s seniors are more vulnerable to volatility in the housing market. For instance, the influx of retirees in northwest Michigan has made housing prices rise to where others cannot afford to live there, O’Malley said.

An increasing level of senior debt makes sense given that seniors have experienced several years without Social Security cost of living adjustments, said Mark Hornbeck, associate communications director for Michigan AARP.

But even with debts, seniors energize both the state and the nation’s economy, he said. They spend more in the local economy and contribute to the workforce.

Experts are split on the impacts of aging on the national economy.

A 2016 RAND Corporation study found that a 10% increase in the senior population decreases national GDP growth by 5.5%.

In contrast, an AARP study concluded that contributions from those 50 and older, or the longevity economy, make up 44% of Michigan’s GDP.

“Contrary to popular belief that seniors are a drain on government resources and a drain on the local economy,” Hornbeck said, “actually, the reverse is true. They spend their money.”

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