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Over-65 debt levels on the rise

Written by: Tim Chen
Retirees are increasingly struggling to maintain their standard of living post retirement, with debts held by over-65s leaping from £70bn in 2016 to an estimated £85bn in 2018.

Of the expected £85bn of debt in 2018, secured debt such as mortgages account for some £73bn of the total.

According to the Centre for Economics and Business Research (CEBR), nearly 40% of 65-74-year-olds with an interest-only mortgage will struggle when the capital repayment is due.

However, secured debt is not the only burden of retirees.

The Key Retirement study found that 26%, or just over one in five of over-70s are using three or more credit cards to support their living costs – with one in 10 holding outstanding balances for more than a year.

The study also showed that one in seven of over-65s rely on credit cards to supplement their retirement income.

Yet, post retirement debt was not fuelled by over-spending.

Rather, it was a combination of inadequate saving, the launch of pension freedoms, and unexpected bills which meant pensioners needed to rely on borrowing in retirement.

‘Debt is a silent source of worry’

The survey used a sample of 3,000 adults aged 55 and over, split between those aged 55 to 65 still in work, retirees aged 65 to 70, and retirees above 70.

Over half of those surveyed (55%) said they had to use credit cards to pay for unexpected bills, with car repairs being the most common issues followed by emergency house repairs.

“A comfortable stress-free retirement is what we all want but debt is increasingly a silent source of worry for too many retirees,” said Alvin hall, independent financial expert.

Dean Mirfin, chief product officer at Key Retirement, added: “The issue of debt in retirement isn’t discussed as openly as it should be.

“However, not only is it a problem, it’s a growing one.

“Pensioners worried about debt are not alone. We are all living longer and that means our savings have to last longer and we have to plan more carefully. Helping out family can also rapidly cut retirement funds while pension freedoms make it easier to access cash.”

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  • Andy Robertson-Fox

    And imagine what it is like for 4% of all UK State Retirement Pensioners world wide who are even denied the annual index linked ıncrease sımply because they live in the wrong country. Some 650,000 pensioners who do live abroad are index linked but another 540,000 who also live abroad are not. Even those in EEA countries, where increases are covered by EU Law, have been promised their ıncreases will continue after Brexit. Why them and not us? Why those living in the EU but not those in Australia, Canada, and New Zealand? Why those living ın the USA, the Philippines and Barbados but not those in South Africa, Thailand and Mexico? They all met the same National Insurance Contributions conditions during their workıng lıves as everyone else, so why the discrimination?

    • Morgeo

      Absolutely right Andy , there is no valid excuse for this which is discrimination with a capital D. The politicians have used many arguments to support this fraud but when it comes down to the bottom line it is still fraud and only saved by them using an Act of Parliament to implement it thereby making it legal even though it is an abuse of power by them. Their Code of Conduct is also being ignored.
      In addition to what I have already said there is the fact that the cost to uprate these pensioners and bring them into line with pension parity is so small by today’s standards that it seems incredible that the politicians are so blind and have not done so ? Just 1/20th of the Overseas aid currently given away would do it and that represents about 0.6% of the total pension budget. Go figure !

      • protempore

        Also being ignored is the new Commonwealth Charter signed by the Queen a couple of years ago in which it states, and I paraphrase here, that all Commonwealth countries are expected to end any form of discrimination. The UK ignores this in treating 4% of it’s own state pensioners differently to the 96% when ALL are entitled to be treated the same by virtue of a lifetimes NI contributions.

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