WI20-Q2: Economic Security of Older Adults during the COVID-19 Crisis: Early Data to Inform Research and Policy

Abstract

This study documents the credit outcomes of older adults immediately before and after the onset of the COVID-19 pandemic in the US. Using credit data to track indicators of financial distress, this study shows that on average, older adults experienced larger reductions in total household debt in the period after the start of the COVID-19 pandemic, relative to adults age 18 to 49. However, there is significant heterogeneity within the population of older adults, where those with higher incomes, with mortgage debt, and with higher credit scores experienced the largest declines. Lower-income older adults experienced an increase in total debt during this period. We also find that older adults are significantly less likely to be approved for new credit in 2020, with the oldest adults (72 and older) experiencing the largest decline in approval rates among those seeking credit. Our results indicate that a large share of older adults benefited from loan payment accommodations during the COVID-19 pandemic. These borrowers tend to be more vulnerable based on debt and credit characteristics, and suggest caution about how well they will manage debt payments when accommodations expire. Finally, we find small but persistent evidence that people in states harder hit by COVID-19 are also among those most likely to rely on accommodations. Overall, these data suggest significant heterogeneity in the credit experiences of older adults during the COVID-19 pandemic that may affect future household financial security.