According to Prudential’s ‘Class of 2016’ research which looks at the amount of money owed by those who plan to retire over the next 12 months, the average debt has dropped for the fourth year in a row to an average of £18,800, a fall of £3,000, or 14%, from last year.

And since 2012 when the average amount owed per retiree stood at £38,200, pensioners’ debt has fallen by nearly £20,000.

Women planning to retire this year have seen a big fall in their debts compared with last year as they now owe £17,800 which is more than £7,000 lower than in 2015.

Male retiree debt is virtually unchanged from last year, averaging £19,600.

‘Proportion of those in debt remains stubbornly high’

Prudential said the proportion of those in debt remains “stubbornly high” as 20% will start their retirement in the red – a figure which has remained consistent since 2011.

They expect to clear the debt in around three-and-a-half years, with the average payment at £224 per month. But 13% expect to take seven years or more to pay off while worryingly, one in 12 believe they’ll never be debt free.

Prudential found the biggest source of debt is down to credit cards as 51% owe money on plastic, while 33% still need to pay off their mortgage. However the number of people who are still paying off their property has fallen sharply from 43% last year.

‘Having to repay outstanding debts makes the transition more difficult’

Stan Russell, a retirement expert at Prudential, said: “For many people, the switch from working life to retirement will see them getting used to living on a tighter budget and having to repay outstanding debts can only make this transition more difficult.

“A consultation with a professional financial adviser in the run up to retirement can help people to their get finances in the best possible shape for when the time comes to give up work.”

Russell adds there is plenty of free help on managing and paying off debts, including the government’s Pension Wise service and Citizens Advice.