An economic insecurity story
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Is owning your house, no mortgage, debt-free during retirement becoming a rare luxury?

I'm David Brancaccio in Los Angeles. First reps for the U.S. and China are talking trade today in London. It's about tariffs, but not only tariffs. Marketplace's Nancy Marshall-Genzer is following the story.

The U.S. delegation to the talks includes Treasury Secretary Scott Besson, U.S. Trade Representative Jameson Greer, and Commerce Secretary Howard Lutnick. They're trying to convince China to relax controls over its exports of rare earth minerals. Beijing wants the U.S. to relax its limitations on American exports of computer chips and parts for nuclear power plants.

China's economy has been showing signs of strain. Chinese exports to the U.S. fell more than 34 percent in May, the biggest decline since February of 2020 at the start of the pandemic. The two sides are trying to build on progress they made during talks in Geneva last month when they agreed to a 90-day pause on triple-digit tariffs they imposed on each other earlier in the year. I'm Nancy Marshall-Genzer for Marketplace.

When they're nervous about markets and the world, investors like to take away risk and put money into cash. Not cash cash, but often money market funds. The interest rate is negligible, but the amount doesn't really zig or zag.

And during one week this month, investors poured more money into money market funds than at any time since late last year. Sixty six billion dollars in one week. Marketplaces. Henry Epp has more. Money market funds typically invest in short term securities, federal and municipal bonds, mostly in some cases, corporate bonds, too. Those are investments that are considered a low risk.

And right now they get a pretty good return, says Stephen Blitz, chief economist at TS Lombard. If you put in a money fund and you earn between four and four and a half percent,

That's good money against inflation. It's a real return. And so it's attractive to people. Especially at a time when other investments have been swinging around a lot. But even though stocks have risen in the past month, a lot of investors are feeling cautious, says Sandy Brager with the wealth management firm Aspiriant. The news cycle changes so much. And so I think there's more emotion in investors' minds and there's more uncertainty about what to do. And I think that's paralyzing a lot of people.

And it's pushing many of them towards safety, like money market funds. But those might not be the right choice for everyone, Breger says. They make more sense for older investors who are nearing retirement and don't have as much time to take risks with their money. I'm Henry Epp for Marketplace.

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Mortgages make up about 70% of household debt. We're told to pay off that debt before retiring, but over three decades, data show more people are still paying their home loans after retirement, and what is owed has increased dramatically. This is an economic insecurity story. Marketplace's senior economics contributor, Chris Farrell, has this latest installment of our series on seniors and debt.

For homeowners, the dream of getting rid of the mortgage and saying goodbye to colleagues for the last time were once closely linked. The bond is best captured by the image of mortgage burning parties popular in the 50s and 60s.

The television show Mayberry RFD in 1969 aired an episode called Emmett's Retirement. Emmett gathers some neighbors in his handyman shop. In one hand is a blowtorch. His other hand holds his bank mortgage statement. Gentlemen, you are now witnessing that great American ceremony known as burning the mortgage. No kidding? Oh, that's great, Emmett. Yeah. Yeah? Yeah.

That little old house is now all free and clear. Emmett tells his friends he can now retire and go fishing. Mortgage-burning parties are something of a relic. Over the past three decades, the share of homeowners ages 65 to 79 with a mortgage rose from 24% to 41%, while median mortgage debt surged by 400%. That's according to the Joint Center for Housing Studies at Harvard University.

Among homeowners 80 years and older, the numbers are even more dramatic. The share with mortgages jumped from 3% to 31%, and median mortgage debt increased by 750%. For a lot of people, I think this isn't a choice. It isn't a financial strategy. It's more of a reality.

Jennifer Malinsky is director of the Housing and Aging Society program at Harvard's Housing Center. Her insight is echoed by Lina Zhu, research analyst at the Urban Institute. For wealthier homeowners, maybe carrying a mortgage debt might be a strategic choice. But for many, most of the senior or older adults who

who are living on fixed incomes, it's not a strategy, it's necessity. So the stress of housing debt in retirement is real and growing. The number of so-called cost burden older adults is at an all-time high. That means they are spending 30% or more of their income on housing, utilities, taxes, and insurance.

Jennifer Malinsky. 97% of older owners with mortgages who are lower income have an income under $25,000 are cost burdened, meaning they're paying more than 30% of their income for housing. Older cost burdened homeowners are at financial risk. Amelie Zinn of the Urban Institute says they're vulnerable to unexpected expenses.

There could be a health shock. There could be an issue with their home, especially, you know, as they're living in homes that maybe they haven't renovated in a while or they've been in that home for, you know, 30 years or so or 25 years paying off that mortgage. And they're going to need to, you know, cover a roof repair, fix it, you know, AC unit. There could be a flood or a storm, especially with, you know, increased climate change and severe climate catastrophes and events. The mortgage debt story mirrors the broader trend toward more older adults entering retirement in debt.

Debt repayments can hike financial stress and vulnerability, especially for those of modest means. The struggle to cover debts leaves them with less money for essentials like food, health, and home maintenance, let alone fun. I'm Chris Farrell for Marketplace. Our Buy Now, Pay Later on seniors and debt is in partnership with NextAvenue, a nonprofit news platform for older adults produced by Twin Cities PBS.

Markets Dow and S&P futures are down by less than a tenth of a percent. NASDAQ futures are little changed at this juncture. We come into this week with the average fixed rate home loan mortgage up 6.97 percent. In Los Angeles, I'm David Brancaccio. You're listening to the Marketplace Morning Report from APM American Public Media.

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