Debt linked to marriage breakdowns

Elderly couple on beachOlder 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.

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.

Free guides
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

Seven retirement nightmares

More stories