Paying it Back: Real-World Debt Service Trends and Implications for Retirement Planning

Wharton Pension Research Council Working Paper No. 2019-13

Published in Mitchell, O., and A. Lusardi (Eds.) (2020). Remaking Retirement: Debt in an Aging Economy. Oxford, UK: Oxford University Press.

Posted: 20 Feb 2020 Last revised: 30 Nov 2020

Date Written: May 2, 2019

Abstract

This research uses a unique data set to answer some fundamental questions that have not previously been fully addressed. Specifically, it provides a summary of the debt service patterns of United States consumers that is derived from de-identified Chase data. The primary purpose is to get a sense of real-world debt service trends through different life stages and, therefore, more realistically save for and live in retirement. To accomplish this, we will provide insights related to important questions that underlie retirement planning assumptions. What is the average level of debt service at various life points? What is the average composition of payments across different debt types? How much do households typically pay, on average, for the specific types of debt they support? Are there specific life-cycle patterns that occur for different types of debt service? Do wealthier households manage debt service differently from households with lower asset levels? This study explores these questions and outlines high-level implications for retirement planning.

Keywords: age range, asset level, auto loan, average annual debt service, debt life cycle, debt service patterns, home equity loans/lines of credit, income replacement, mortgage, retirement planning, revolving credit card, spending transaction data, student loan

Suggested Citation

Lester, Anne and Santiago, Katherine and Oh, Je and Wu, Livia and Chegaeva, Ekaterina, Paying it Back: Real-World Debt Service Trends and Implications for Retirement Planning (May 2, 2019). Wharton Pension Research Council Working Paper No. 2019-13, Published in Mitchell, O., and A. Lusardi (Eds.) (2020). Remaking Retirement: Debt in an Aging Economy. Oxford, UK: Oxford University Press., Available at SSRN: https://ssrn.com/abstract=3540454 or http://dx.doi.org/10.2139/ssrn.3540454

Anne Lester (Contact Author)

JP Morgan ( email )

London
United Kingdom

Katherine Santiago

JP Morgan

London
United Kingdom

Je Oh

JP Morgan ( email )

London
United Kingdom

Livia Wu

JP Morgan

London
United Kingdom

Ekaterina Chegaeva

JP Morgan

London
United Kingdom

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