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High rents increasingly becoming a driver of financial fragility for low-income older households

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Abstract

Outside of Social Security, housing equity is the primary mechanism for accumulating wealth in the United States, and indeed, 73 percent of households over 65 own their home.1 It may therefore come as a surprise that more than a quarter of households with a member between the ages of 55 and 64 in the bottom half of the income distribution face housing-related financial fragility. Middle- and high-income households are not exempt from the risk of financial fragility due to housing costs and debt, though many of these households own their own homes. Among these groups, 10.3 and 6.4 percent, respectively, face high housing costs and debt burdens (see Figure 1). What’s more, the share of older low-income households facing housing-related financial fragility has increased steadily; between 2013 and 2020, the share of low-income older households who had to pay rent exceeding 30 percent of their income increased from 18.2 percent to 23.7 percent (See Figure A1 in the Appendix for details).

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  • Eva Conway & Barbara Schuster & Siavash Radpour & Teresa Ghilarducci, 2023. "High rents increasingly becoming a driver of financial fragility for low-income older households," SCEPA policy note series. 2023-02, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepapn:2023-02
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    File URL: https://www.economicpolicyresearch.org/images/Retirement_Project/Policy_Notes/2023/May_Housing_Fragility/Financial_Fragility_Final.pdf
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    Keywords

    Financial fragility; low-income; Workers; Jobs; Renting; Risk; Older workers; debt; retirement; retirement savings; emergency savings;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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