You are here: Home - Retirement - Retirement planning - News -

2016’s retirees owe £260m less than last year

0
Written by: Paloma Kubiak
04/02/2016
A fifth of people planning to retire this year will have an average of £18k of debt, but collectively, the amount of money owed is £260m less than those who retired in 2015.

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.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • RT @DomWrong: UK avoiding a recession but it will be harder to grow if the rest of the global economy slows according to @ArtBLondon on @Yo
  • RT @HendersonRowe: “Brexit aside, the UK will struggle to expand if the rest of the global economy is slowing down. After a strong July and…
  • RT @HendersonRowe: “Brexit aside, the UK will struggle to expand if the rest of the global economy is slowing down. After a strong July and…

Read previous post:
£160bn of savings ‘obliterated’ due to rock bottom interest rates

Savers have missed out on an estimated £160bn of interest payments because of the record low base rate, according to...

Close