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Older adults hold more debt today than in past generations, and a new study from the University of Michigan shows a correlation between indebtedness and cognitive ability. This relationship is even more pronounced during the pandemic. Much of the increase in total debt is due to older adults with higher cognitive ability taking on disproportionately more mortgage debt in response to increasing local home prices than their counterparts with lower cognitive ability. In addition, adults with higher cognitive ability also take on greater debt of other types, such as credit card and medical debt.

“We find that cognitive ability is an important predictor of debt burdens in older age and that this relationship has changed over time during the period of expansion in financial complexity,” according to researchers from the University of Michigan. “Our results suggest that older adults with higher cognitive ability have taken on more debt relative to their counterparts in more complex financial environments.”

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