Older retirees in majority-minority neighborhoods struggle with debt in ways their counterparts in white communities do not, according to a new Urban Institute study.
To determine how older Americans have fared financially in recent years, the researchers sampled credit bureau data from 2010 to 2019, tracking individuals’ financial progress during that time period. Since the credit bureau information did not include details about race, the researchers used the Census Bureau zip code information to determine how borrowing communities compared racially.
The study found that older adults in minority communities were more likely to have faced economic challenges during this decade, even though everyone the researchers followed started the period with good credit scores. comparable. For example, 26.7% of residents of minority zip codes experienced poor credit scores during this period, while only 16.6% of their white zip code counterparts did.
Retirees from minority communities also struggled longer than their counterparts from richer communities. In minority communities, 17.1% of seniors had poor credit for five years or more, while only 13.5% of those in white neighborhoods experienced the same.
“Part of that difference could lie only in the types of borrowing that residents of poor neighborhoods may have versus those in better-off neighborhoods, and unsecured versus secured debt,” says Barbara Butrica, member. senior from the Urban Institute who co-authored the report. For example, borrowers from low-income minority communities may take out payday loans or âoften not be able to qualify for mortgages and loans from traditional lending institutionsâ.