British retirees saddled with debt
Two in five Britons over 55 will have a mortgage or overdraft going into retirement, while a quarter expect to have credit card debt.
The figures from equity release lender More 2 Life are up on last year when just 31% of people expected to take debt with them into retirement.
The research found that one in six over 55s has more than £4,000 on credit or hire purchase, with the mean borrowing on credit card standing at £1,687.
Worryingly, 54% of mortgagees will have more than £10,000 left to pay at retirement.
More 2 Life also found the pension freedoms rules have impacted retirees’ borrowing habits with some using these funds to replace unsecured and short-term borrowing on credit cards, personal loans and even store cards.
The lender said retirees should not be using their pension pots as an alternative to credit cards and loans “as a pension pot is not unlimited cash and will run out”.
Dave Harris, managing director at More 2 Life, said: “Unsurprisingly, the over 55s want to be debt free as they enter their retirement years. However, whilst money is being drawn out under pension freedoms, it is not being used to pay down existing debts to any great extent, but rather to replace new, short-term borrowing.
He said that many over 55s are also taking out credit via loans or credit cards, some with interest rates as high as 19% APR, and are overlooking their property wealth which could see them benefit from equity release.