WASHINGTON, April 28, 2014 — Some may ask how bad debt really is in America. Debt can be avoided. It takes better consumer education.
READ ALSO: How much risk should you take in business?
There is a perception that after the latest recession, people have changed habits, started spending smarter, and that everything has improved. However, statistics tell a different story.
One out of every five households now has student loan debt. More strikingly, 40% of those households are headed by someone under the age of 35. Student loan debt is becoming more and more of an issue for a younger workforce. Especially when 10% of those in student loan debt owe more than $61,000. These stats, according to the Pew Research Center, detail what could become a larger issue.
When millennials start their careers with increased debt, it will both leave them vulnerable to more debt in the future and limit their purchasing power in the economy.
This also impacts savings.
From 1992 to 2010, the generation now reaching retirement (50-65) increased their total debt by a startling 69%, according to CBS Money Watch. Surprisingly, only 20% of that is from home loans – which can increase in value – while 80% is from credit cards, auto loans, and other less valuable forms of debt.
There is an even more important stat. 60 percent of households with a 401(k) plan, or other retirement contribution plan, added more debt than they put in to their retirement accounts. That means the majority of American households are not properly prepared for retirement.
Jeff Barrett is an experienced columnist and digital public relations professional. He has been named Business Insider’s #1 Ad Executive on Twitter, a Forbes Top 50 Influencer In Social Media and has contributed to Technorati, Mashable and The Washington Times.