As a nation, our borrowing is growing as fast as our wealth and we are continuing our spendthrift ways into retirement.
Take the recent real estate boom.
Federal Reserve data show that the value of household real estate climbed 71% over the past five years. But mortgage debt grew even faster, up 75%, as people cashed out part of their home's value when they refinanced or took out second mortgages.
Among households headed by someone age 75 or older, 40% had some sort of debt in 2004, up from 29% three years earlier. The sums involved aren't small. The Federal Reserve's 2004 Survey of Consumer Finances found that 19% of these older Americans had a mortgage on their primary residence, with $31,000 typically owed.
If your prospective retirement income looks a little thin, you know what you need to do: Stop borrowing, pay down existing debts and start saving like crazy.
Source: The Debt Bubble Threatens to Derail Many Baby Boomers' Retirement Plans, The Wall Street Journal, March 8, 2006