Older people who fall into "problem" debt are twice as likely to see their marriage break down as those who do not, a report suggests.
The study compiled by Age UK and the International Longevity Centre (ILC-UK) warned of the increased financial pressures on the over-50s from rising energy prices, paltry returns on savings and poor annuity rates, which set the size of someone's retirement income for life.
%VIRTUAL-SkimlinksPromo%The report found older people with problem debts which they struggled to pay back were more than twice as likely to have experienced a breakdown with a partner in the last decade than those who did not. It said: "This suggests that problem debts could have contributed to the breakdown." Around three in 10 (28%) of people aged over 50 with debts were found to be struggling to pay them back in 2010, compared with 23% in 2002, the research found.
People were seen as having "problem" debt if they paid a specific proportion of their income to meet its costs - ranging from 10% of income for the very poor to 25% for the very rich; said they were having difficulties; or had non-mortgage debts of more than around £12,600.
Significant levels of debt for people in or approaching retirement can cause particular hardship as the options to repay the money by this stage in life are often "limited or non-existent", the research said.
It said the traditional image of older people always "living within their means" may also be changing, with those reaching retirement having become more reliant on credit cards and other forms of borrowing than older pensioners.
Despite the increase in the proportion of indebted older people with "problem" debts, overall debt levels have been falling, indicating that debt is becoming more concentrated among fewer people, the research found. The Problem Debt Among Older People report found those most "at risk" from debt included the self-employed and those with a mortgage.
Fears have been raised in recent months about people sitting on an interest-only mortgage "time bomb", meaning they will not be able to afford to pay off their loan fully when the mortgage term ends. The report also pointed to recent research by regulators which found 40,000 households aged 65 plus will see their interest-only mortgage mature between 2017 and 2032.
Michelle Mitchell, charity director-general of Age UK, said: "There is a small group of older people who are facing the nightmare of increasingly serious debt problems which doubles their chance of their marriage breaking down and can ruin their quality of life. While it is good news that overall debt among the older population is falling, this research, supported by evidence from other charities, sends a clear warning that funding for debt and money advice for older people must be protected and expanded."
Much of the research for the report was based on the English Longitudinal Survey of Ageing (ELSA), as well as the British Social Attitudes Survey and the Family Resources Survey, covering the UK.
Seven retirement nightmares
Debt linked to marriage breakdowns
Figures from charity Age UK show that 29% of those over 60 feel uncertain or negative about their current financial situation - with millions facing poverty and hardship. Even though saving for retirement is not much fun, the message is therefore that having to rely on dwindling state benefits in retirement is even less so. To avoid ending up in this situation, adviser Hargreaves Lansdown recommends saving a proportion of your salary equal to half your age at the time of starting a pension. In other words, if you are 30 when you start a pension, you should put in 15% throughout your working life. If you start at 24, saving 12% of your salary a year should produce a similar return.
Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.
Around 427,000 households in the over-70 age groups are either three months behind with a debt repayment or subject to some form of debt action such as insolvency, according to the Consumer Credit Counselling Service (CCCS).
Its figures also show that those aged 60 or older who came to the CCCS for help last year owed an average of £22,330. Whether you are retired or not, the best way to tackle debt problems is head on.
Free counselling services from the likes of CCCS and Citizens Advice can help with budgeting and dealing with creditors.
Importantly, they can also conduct a welfare benefits check to make sure you are receiving the pension credit, housing and council tax benefits, attendance and disability living allowances you are entitled to.
The average UK pensioner household faces a £111,400 tax bill in retirement as increasing longevity means pensioners are living on average up to 19 years past the age of 65, according to figures from MetLife. And every year in retirement adds an extra £5,864 in direct and indirect taxes based on current tax rates to the costs for the average pensioner household. You can be forced to go bankrupt if you fail to pay your taxes, so it is vital to factor these costs into your retirement planning.It is also important to check that you are receiving all the benefits and tax breaks you are entitled to if you want to make the most of your retirement cash.
The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.
Older Britons are often targeted by unscrupulous criminals - especially if they have a bit of money put away. For example, many over 50s were victims of the so-called courier scam that tricked into keying their pin numbers into their phones and handing their cards to "couriers" who visited their homes. It parted consumers from £1.5 million in under two years. Detective Chief Inspector Paul Barnard, head of the bank sponsored dedicated cheque and plastic crime unit (DCPCU), said: "Many of us feel confident that we can spot fraudsters, but this type of crime can be sophisticated and could happen to anyone." The same is true of boiler room scams that target wealthier Britons with money to invest, offering "once-in-a-lifetime" opportunities to snap up shares at bargain prices. Tactics to watch out for include cold calling, putting you under pressure to pay up or lose the opportunity for good, and claiming to have insider information that they are prepared to share with you.