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Home > Debt Study > Executive summary

Debt Study

• Overview
• "Dugout Debt"
• Debt: The Detour on America's Road to Retirement (2009, pdf)
• Press release
• Executive summary
• Methodology
• Charts
• Fact sheet
• Bios
• News coverage
• Debt: The Blind Spot on America's Road to Retirement (2007, pdf)
• About Securian

Survey: Debt is a Detour on the Road to Retirement

Concern and discussion about the level of debt in this country are rising as we learn more about the role Americans' use of debt played in creating today's recession. In October 2007, before the economic downturn began, Securian conducted a study to better understand how attitudes and usage of debt differ from one generation to another. Securian commissioned a similar study this year to determine whether financial attitudes and behavior changed as Americans experienced economic distress.

The study set out to learn:

• What are Americans' attitudes toward debt?
• Is their debt behavior consistent with their attitudes?
• Do Americans come to grips with debt as they approach retirement?
• Are Americans realistic about debt and how they will manage it in the future?

The 2007 study focused on differences among four generations:

• Generation Y – born 1982 to 1988
• Generation X – born 1966 to 1981
• Baby Boomers – Born 1946 to 1965
• Silent Generation – born 1935 - 1945

This 2009 study focuses more on how consumer attitudes and behavior changed over the 16 months since the initial study, though intergenerational comparisons also are of interest.

This study was conducted by Securian Financial Group, a company in the business of helping consumers achieve financial security for the long run. By better understanding attitudes and behaviors regarding debt, and any inconsistencies between the two, the financial planning community is better equipped to tackle this problem, particularly with an eye on the impact it may be having on Americans' ability to achieve retirement security. Keeping track of trends also will shed light on the way Americans' behavior and perceptions change over time.

For purposes of this study, the definition of debt does not include mortgages, unless otherwise noted. The majority of Americans own homes, and it is reasonable to assume they can only afford to do so with a mortgage. The study also set income minimums for each generation.

Changes in Respondent Demographics Since 2007

Respondents to the 2009 study are in slightly less favorable financial situations than fall 2007 respondents. In particular:

• The percentage employed full time has fallen from 56 percent to 48 percent.
• Household income is lower, on average, with the proportion reporting household incomes under $50,000 rising from 30 percent to 38 percent.
• Household assets also have declined, with three-quarters (75 percent) now saying they have less than $100,000, compared with 68 percent in late 2007.

These changes may be due, in part, to the recession. For example, the national unemployment rate rose from 4.8 percent in October 2007 to 8.1 percent when this survey was conducted.¹

Americans are saving more for emergencies this year than in 2007 and many say they are contributing more to their retirement accounts than they did last year.

Behavior has shifted from spending toward savings as consumers search for ways to cut costs. They are more likely to see debt as something to avoid; accordingly, they are less likely to use debt for non-necessities. Most are proud of the ways in which they are cutting back.

Despite the current shifts in behavior, eight in 10 consumers have non-mortgage debt, unchanged since 2007. Although amounts of debt have not increased overall since 2007, Baby Boomers' debt has risen.

Few are actively paying down their debt, but most expect to have fully eliminated all non-mortgage debt within the next five years. A contrasting finding is that many non-retirees believe their debt will affect their ability to have a comfortable retirement. Perhaps at a subconscious level, people are aware that their debt is a long-term issue.

Although behavior is beginning to shift, consumers do not seem to be making strides in reducing or eliminating their debt. Encouraging a debt reduction strategy among consumers and providing additional education will serve to get them farther along the right track.

¹ Bureau of Labor Statistics, unemployment rate among Americans ages 16 and older, from the Current Population Survey.