Half of over-55s face retiring in debt
The future is far from bright for the next generation of pensioners, with new research revealing that almost half of over-55s are struggling to clear their debts before they retire.
On average over-55s owe £4,400 each, according to figures from the Debt Advisory Centre. Those debts are held on credit cards, unsecured loans, mortgages and hire purchase agreements. Around 13% of people owe more than £10,000.
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Dealing with debt
These large debts could mean that thousands of older people have to continue working past their retirement age. Of those surveyed 7% admitted that they were planning to delay their retirement while they dealt with their debts.
The research has also revealed a shocking lack of financial planning among the older generation, with 25% saying they have no idea how they are going to pay off their debts.
"It's very worrying to see such a high number of people approaching retirement with substantial debts to clear," said Melanie Taylor, spokesperson for Debt Advisory Centre. "It's also concerning to see the lack of planning that some are doing to ensure these debts are paid."
Anxious and annoyed
Look at one of those statistics from the other side and the picture becomes even bleaker – only 7% are planning to continue working to pay off their debts. This means the vast majority are planning to retire while still owing money. Back in January, Prudential reported that one in five people planning to retire this year will do so in the red, with an average debt of an incredible £21,800.
The survey found that a quarter of over-55s are anxious about approaching retirement with debts and were unsure how they were going to manage. More than a quarter said they felt annoyed that their retirement would be affected by debt.
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Entering into retirement with debt is very worrying, especially if you have no idea how you are going to meet your financial obligations.
"Most people see their incomes drop once they move from a regular wage to a pension, which usually means they have to change their lifestyle. Trying to make debt repayments with a reduced income means that some pensioners will have to sacrifice more than is comfortable in order to cover priority bills such as housing costs, utilities and food," said Taylor.
If you are approaching retirement with debt and aren't sure what to do about it, there are plenty of places you can get some free help. Read Where to get free debt advice.
Also be sure to check out our guide What to do if you are retired and still in debt.
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