Pensioners caught in debt trap
British pensioners are set to retire £66bn in the red, the latest research from equity release specialist Key Retirement Solutions (KRS) has shown.
Analysis based on 4,507 people aged over 55 years old who released equity with KRS in 2007 has revealed the level of indebtedness among this age group. More than one in three people have outstanding unsecured loans at an average of £11,106 per person.
This is broken down into one in four people owing £8,766 on average in personal loans; a fifth with average credit card debts of £8,358; and 3% with overdrafts of £3,667 on average. In addition, the average outstanding mortgage debt for this age group stands at £37,316 per person.
However, the debt seems to pile up further as people get further into retirement. Total unsecured debt for those aged between 55 and 59 years old is £2.5bn, but increases by 747% (to more than £22bn) for over 70 year olds. On average, this comprises £10,659 per head with a typical monthly payment of £244.
Dean Mirfin, business development director at Key Retirement Solutions, said: “Retirement should be a time to enjoy yourself after all those years of hard work, yet one in 20 people in their 60s, 70s and 80s admit to constantly struggling to keep up with financial commitments or having fallen into arrears.
“The cost of living for the elderly has surpassed inflation over the past decade, therefore it is more important than ever that consumers are aware of the dangers of approaching retirement with such large amounts of debt.”
Chris Tapp, director of charity Credit Action, added: “In recent years there has been a ‘buy now, worry about it later’ culture in the UK when it comes to borrowing, particularly on unsecured forms of credit. For many pensioners today these figures show it’s a case of ‘bought then, worrying about it now’. With the cost of living increasing dramatically – particular as winter approaches and fuel costs mount up – it is vital that those struggling are given the help they need to ensure that people aren’t trapped by debt but are given the necessary advice and support to enable them to stay in control of their money and their lives.”