Denise Revel had a history of developing blood clots, so in 2011, when her leg grew painfully swollen and hot to the touch, she knew what to do. She headed for the emergency room.
She recovered from the clot but could not pay the medical bill. Working as a fitness instructor, she had no health insurance. “I’ve always been financially challenged,” said Ms. Revel, 62, who lives with her daughter in Stockbridge, Ga. “I was a single parent raising two children.”
Four years later, when she was working as a part-time cargo agent for Delta Air Lines, a workplace accident severely injured her leg, leading to extended hospitalization and rehab. Workers’ compensation picked up most, but not all, of the medical costs. In addition to her still-unpaid E.R. bill from years before, she acquired thousands in additional medical debt.
With some older people finding themselves unable to dig out from debt, such dilemmas threaten any notion of a comfortable retirement and have generated alarm among economists and other researchers.
“It’s like a dark cloud over your head,” Ms. Revel said. “You get people calling you, being demanding; some can be very rude. You don’t even want to answer your phone.” She worried constantly about her debts, including monthly installments on her 2014 Toyota Camry, and about being unable to access medical care if she needed it.
Now, researchers at the Urban Institute, by analyzing broad national data over nearly 20 years, have reported that indebted older adults fare measurably worse on a range of health measures: fair or poor self-rated health, depression, inability to work, impaired ability to handle everyday activities like bathing and dressing.
Those in debt were also more likely to ever have had two or more doctor-diagnosed illnesses like hypertension, diabetes, cancer, heart and lung disease, heart attacks and strokes.
“There seems a clear causal link between certain types of debts, especially at higher amounts, and negative health outcomes, both physical and mental,” said Stipica Mudrazija, a senior research associate at the institute.
“Debt is not a bad thing in and of itself,” he said. “If it’s used cautiously, it can build up wealth over time.”
Older adults typically carry less debt than younger ones because people tend to shed debt as they approach and enter retirement. But in recent decades, each cohort of seniors has been more indebted than the previous one.
“There’s a group of older people in financial distress,” said Annamaria Lusardi, an economist at the George Washington University. “They’re highly leveraged; they’re carrying high-cost debt. They’re being contacted by debt collectors. They’re not going to enjoy their golden years.”
Dr. Mudrazija and his co-author, Barbara Butrica, a senior fellow at the institute, used data from the national Health and Retirement Study and calculated that in 1998, about 43 percent of Americans over age 55 had debt, a median of $40,145. By 2016, about 57 percent had debt and more of it: a median $62,784, adjusted for inflation.
The proportion whose debt represented 30 percent of their total assets had risen to almost 45 percent, and the proportion whose debt-to-asset ratio had reached a worrisome 80 percent nearly doubled, to 15 percent.
Although seniors with any debt were more likely to encounter health problems, the kind of debt mattered, according to the study, which was published by the Boston College Center for Retirement Research.
Secured debt, like mortgages and other home loans, is backed by an asset: the dwelling. Such debt rose among older borrowers as real estate prices soared and interest rates remained low. “It’s increasingly less the norm for people to pay off their mortgages before they retire, the traditional model,” Dr. Mudrazija said.
But secured debt appeared less detrimental to health than unsecured debt like credit card balances, student loans and overdue medical payments, which usually charge higher interest rates. About 24 percent of older adults’ debt was unsecured in 1998; by 2016, the proportion had climbed to 35 percent.
Dr. Mudrazija and Dr. Butrica found, for example, that limitations in a person’s ability to perform activities of daily living was only slightly higher for people carrying secured debt than those without debt; the difference did not reach statistical significance. But those with unsecured debt were 28 percent more likely to need help with such activities.
Moreover, as the level of unsecured debt rose, their risks climbed steeply. If what they owed amounted to 30 percent of their assets, they were 65 percent more likely to have trouble with daily activities compared with those with no debt and almost twice as likely if they owed 80 percent of their assets. Other health problems showed similar associations with unsecured debt.
Why would unsecured debt have such impact? The mechanism through which debt affects health remains unclear, Dr. Mudrazija said. He added that the relationship can also work in the other direction: People with poorer health might need to borrow more, especially as increases in health care costs have outpaced inflation.
But “secured debt is a planned debt,” he said. “I decide I’m going to buy a house. It’s an investment, and often a well thought-out decision.”
“Unsecured debt often comes as a surprise,” he added. “You lose a job and have to live off a credit card. You get sick and face a huge hospital bill. The shock and stress might translate to deteriorating health.”
In a 2020 study, also using Health and Retirement Study data, Dr. Lusardi and her co-authors found that even in a relatively high-income group of 51- to 61-year-olds, whose average household income was $103,000, almost one-quarter reported being contacted by bill collectors. “I was frankly shocked,” Dr. Lusardi said. “People close to retirement should be at the peak of their wealth accumulation.”
The pressures are stronger still on older people with less income and education, and on women and nonwhite people.
In a study using credit bureau data, Dr. Mudrazija and Dr. Butrica documented the disparity. “In ZIP codes where people are better off, older people carry mortgages, but they pay them off,” Dr. Mudrazija said. “Where people are poorer, they seem to carry debt indefinitely.” They are also more vulnerable to predatory payday lending.
What could help seniors avoid these credit traps, apart from higher incomes and more comprehensive health insurance? (In 2020, one-fifth of Medicare beneficiaries over 65 paid $2,000 or more out of pocket, beyond the premiums themselves, according to a study by The Commonwealth Fund.)
Dr. Lusardi advocates financial literacy training in workplaces, where employers are more apt to emphasize retirement savings than debt management. Some borrowers don’t grasp fundamentals such as the way interest compounds, she said.
“We have made it very easy to borrow,” she said. “We also need to help people make good decisions.”
But regulating credit, providing clearer consumer information and reining in predatory lending practices could also reduce high levels of unsecured debt, Dr. Mudrazija said.
Last fall, Ms. Revel got a call out of the blue. The nonprofit RIP Medical Debt, which uses donated dollars to buy bundled medical debt, had acquired her long-outstanding emergency room debt of $2,728.50 and erased it. “I was so grateful,” she said.
Unable to work, relying on disability payments, Ms. Revel is now ensured by Medicare and Medicaid, shielding her from most future medical debt. She is down to the last three months of car payments and “I’m counting the days.”
But she still owes a local group of vascular specialists $5,000. At a negotiated $25 a month, she will be nearly 80 when she pays it off.
