U.S. DEPARTMENT OF THE TREASURY

OFFICE OF ECONOMIC POLICY

Trends and Issues in Household Economic Security

JASON BROWN
 Trends in household economic security

 Two key moments of financial decision-making in the life cycle

o Young adulthood

o At retirement

1

Outline of Remarks
2

Macro indicators show considerable recovery from the 

recession.

2017 Q3 

673%

0

100

200

300

400

500

600

700

800

89:Q1 93:Q1 97:Q1 01:Q1 05:Q1 09:Q1 13:Q1 17:Q1

Household Net Worth

as a Percent of Disposable Personal Income 

Source: Federal Reserve Board, Financial Accounts of the United States Q3 2017

 Household net worth has reached a record high.
3

Debt burdens have also fallen.

105%

69%

26%

0

20

40

60

80

100

120

140

89:Q1 93:Q1 97:Q1 01:Q1 05:Q1 09:Q1 13:Q1 17:Q1

Household Debt 

as a Percent of Disposable Personal Income

Total Debt

Mortgage 

Consumer Credit Debt

Source: Federal Reserve Board, Financial Accounts of the United States Q3 2017
4

The median family has not seen a complete recovery in 

terms of wealth.

Median Net Worth

(thousands of 2016 $) Change

2016 1989-2016 2001-2016

All families 97.3 9.8 -20.0

Age of head (years)

Less than 35 11.0 -3.6 -4.9

35–44 59.8 -45.5 -45.3

45–54 124.2 -60.0 -58.2

55–64 187.3 4.7 -63.9

65–74 223.4 80.3 -17.5

75 or more 264.8 129.6 54.4

Source: Federal Reserve Board Survey of Consumer Finances, 1989-2016
5

Household wealth rises with age.

Median Net Worth

(thousands of 2016 $) Change

2016 1989-2016 2001-2016

All households 97.3 9.8 -20.0

Age of head (years)

Less than 35 11.0 -3.6 -4.9

35–44 59.8 -45.5 -45.3

45–54 124.2 -60.0 -58.2

55–64 187.3 4.7 -63.9

65–74 223.4 80.3 -17.5

75 or more 264.8 129.6 54.4

Source: Federal Reserve Board Survey of Consumer Finances, 1989-2016
6

Recent gains in wealth have accrued to older households.

Median Net Worth

(thousands of 2016$)

Change

(thousands of 2016$)

2016 1989-2016 2001-2016

All households 97.3 9.8 -20.0

Age of head (years)

Less than 35 11.0 -3.6 -4.9

35–44 59.8 -45.5 -45.3

45–54 124.2 -60.0 -58.2

55–64 187.3 4.7 -63.9

65–74 223.4 80.3 -17.5

75 or more 264.8 129.6 54.4

Source: Federal Reserve Board Survey of Consumer Finances, 1989-2016
 The burden of financing higher education has increasingly fallen 

on the students themselves.

 Young adults with student debt may delay other major decisions, 

like home purchase, with implications for wealth building.

7

Young adults: Student loan balances have quadrupled in the 

last 15 years. 

0

0.25

0.5

0.75

1

1.25

1.5

2003 2005 2007 2009 2011 2013 2015 2017

Outstanding student debt

Total outstanding student debt (trillions of 2016 dollars)

Source: Federal Reserve Bank of New York, Quarterly Report on Household Debt and 

Credit, Q2 2017.

Q1 2003: $0.3 trillion

Q2 2017: $1.3 trillion
 College graduates earn twice as much as high school graduates.

8

Higher education is still a good investment, however.

1

1.25

1.5

1.75

2

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Weekly wage ratio, college degree vs. high school 

diploma

Wage ratio between workers with college degree vs. high school diploma

Source: Figure 10, Autor (2010). Based on weekly wages from the March CPS, adjusted for worker 

characteristics.

1980: 1.50

2008: 1.97
 Many students attend schools that have systematically low 

repayment rates.

9

While there is a college wage premium, there is considerable 

variation in outcomes among individuals.

Student Loan Repayment Rate by Institution

Institution’s cohort 

5-year repayment 

rate

Implied 

repayment 

term

Share of 

undergraduate 

borrowers

Below 0% Neg Am 4%

0% to 15% 20+ years 27%

15% to 20% 15-20 years 19%

20% or above <15 years 51%

Notes: Covers undergraduate loans that began repayment in 2009 and observed five years later. 

Source: Chou, Looney & Watson (2017).
 Key financial decision is not just whether to take on student loan 

debt, but what education that debt is financing.

 Although repayment rates vary by school, it’s not just an issue of 

selectivity—lots of unselective schools have excellent repayment 

outcomes.

 Completion of degree matters.

o Outcomes of “some college” converging with those of high 

school only.

 Field of study matters.

o Some majors earn more than others. Among mid-career primeage workers, the median earnings for STEM majors are $15,000 

higher than for all majors ($76,000 compared to $61,000).

10

What education the student loan finances matters.
11

Older households: The typical older household has some 

wealth, but most of it is concentrated in housing.

Median Household Wealth by Marital Status, and Disability Status (65+)

Total wealth Non-housing wealth

All households $231,311 $87,379

Source: Health and Retirement Study (2000-14) and Treasury calculations
12

Married households with no one disabled are considerably 

better off than the median elderly household.

Median Household Wealth by Marital Status, and Disability Status (65+)

Total wealth Non-housing wealth

All households $231,311 $87,379

Married, not disabled $368,928 $163,098

Source: Health and Retirement Study (2000-14) and Treasury calculations
13

Households with a disabled member, however, have much 

less wealth.

Median Household Wealth by Marital Status, and Disability Status (65+)

Total wealth Non-housing wealth

All households $231,311 $87,379

Married, not disabled $368,928 $163,098

Married, one or more disabled $157,586 $31,747

Source: Health and Retirement Study (2000-14) and Treasury calculations

 Long-term care costs are high and not broadly covered by 

traditional health insurance.
14

Single (including widowed) households are also considerably 

less wealthy.

Median Household Wealth by Marital Status, and Disability Status (65+)

Total wealth Non-housing wealth

All households $231,311 $87,379

Married, not disabled $368,928 $163,098

Married, one or more disabled $157,586 $31,747

Not married, not disabled $123,752 $31,365

Source: Health and Retirement Study (2000-14) and Treasury calculations
15

The typical single, disabled household has virtually no 

wealth.

Median Household Wealth by Marital Status, and Disability Status (65+)

Total wealth Non-housing wealth

All households $231,311 $87,379

Married, not disabled $368,928 $163,098

Married, one or more disabled $157,586 $31,747

Not married, not disabled $123,752 $31,365

Not married, disabled $9,289 $1,255

Source: Health and Retirement Study (2000-14) and Treasury calculations

 Disability and widowhood present major risks to economic security 

among elderly households, even more than aging itself.
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Older women are especially vulnerable.

6%

21%

6%

9%

29%

12%

0% 20% 40%

Disabled (65+)

Overextended

(65+)

In poverty (65+)

Economic security of the 65+ 

population, by gender

Women Men

Source: Health and Retirement Study, Treasury calculations

 Older women are twice as 

likely to be in poverty than 

men.

 Nearly 30 percent of women 

are overextended—their 

spending exceeds what their 

income and wealth can sustain.

 Women are more likely to be 

disabled.
17

The vulnerable older population is mostly women.

 Because women make up a 

large share of the older 

population, they also make up 

a disproportionate share of the 

vulnerable population.

 Along many metrics, women 

make up over 2/3 of the 

vulnerable older population. 

68%

68%

71%

68%

58%

32%

32%

29%

32%

42%

Disabled (65+)

Overextended

(65+)

In poverty (65+)

85+

65+

Gender distribution of age 

and economic security 

indicators among the 65+

Women Men

Source: Health and Retirement Study, Treasury calculations
 A lot of wealth is tied up in housing, but reverse mortgages have not 

been widely taken up.

o Only about 50,000 reverse mortgages are sold each year.

 The decline in defined benefit plans has not been offset by private 

annuities.

o The median elderly household receives no income from private 

pensions or annuities.

 Only about 12 percent of the elderly population has private longterm care insurance.

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Strategic wealth decumulation is key in mitigating risks in 

retirement, but there is low take-up of relevant products. 
 With weak wealth accumulation across most households, financial 

decision-making becomes even more important.

 Households face different issues at different stages of the life cycle.

o Early adulthood decisions have long-term repercussions for 

wealth building.

o Decisions made at the time of retirement can shape economic 

security for the remainder of one’s life. 

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Concluding thoughts