One in 12 people planning to retire this year will still be paying off their mortgage.
Prudential, which carries out research each year to gauge the state of people's finances as they approach retirement, found that one in six (17%) people ending their working lives in 2014 will still be burdened with some form of debt, including mortgages, credit cards or personal loans.
Some 8% of those planning to retire in 2014 said they still have not fully paid off their mortgage and around 10% still have credit card debt piled up.
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On average, those who still have some form of mortgage and/or non-mortgage debt owe £24,800, although this figure is around one fifth (21%) lower than the typical debt in 2013 of £31,200, researchers found.
Across Britain, Scotland had the highest rate of people retiring this year with debts outstanding. Nearly one quarter (24%) of people retiring in 2014 there said they would have some form of debt.
Wales and the North West were the next most likely areas for retirees to owe money, with 21% of people in both of these areas saying they would retire in debt.
Women have cut their debts more significantly than men compared with a year ago, the research found.
On average, women retirees with debts will owe £20,700 this year, which is £7,400 less than last year.
Men will owe £28,400, which is £5,400 less than male retirees in 2013.
Those with debts expect to take four years on average to clear what they owe. But nearly one fifth (18%) of retirees with debts said it will take seven years or longer. One in 50 (2%) of those in debt believe they will never fully clear them.
Concerns have been growing for people who are still sitting on large amounts of mortgage debt. Last year, a report from Bristol University and the International Longevity Centre (ILC-UK) found that about two-fifths (40%) of people aged 75 and over and who still have a mortgage to pay off have an interest-only mortgage with no linked investment with which to pay their loan back.
Interest-only mortgages, which allow borrowers to pay off the capital only when the mortgage term ends, have become much thinner on the ground since the boom years amid concerns about people not being able to pay back their debt.
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The Financial Conduct Authority (FCA) has previously found that home-owners have been failing to put enough money aside on up to half of the 2.6 million interest-only mortgages which are due for repayment over the next 30 years.
Mortgage lenders have been alerting their most at-risk customers to help them avoid "payment shocks'', but some borrowers could end up having to sell their home to pay the loan back if they do not take stronger control of their repayment planning.
Stan Russell, a retirement expert at Prudential, said that while the research shows a "welcome downward trend" in the debts people will be carrying into their retirement, it is "clearly sensible" to make sure that debt does not eat into retirement incomes too much for too long.
He said: "Paying off debts as early as possible - and ideally while still working - will help to increase disposable income in the early years of retirement."