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Older people in ‘problem debt’ twice as likely to get divorced

Tahmina Mannan
Written By:
Tahmina Mannan
Posted:
Updated:
04/06/2013

The 1.1 million older people struggling to pay down debt are more likely to experience marital breakdown, says a new report.

According to research by the International Longevity Centre and Age UK, three in 10, or 1.1 million older people are considered to be in “problem debt” and are struggling to repay what they owe.

The report said those struggling to repay debts are twice as likely as those who not in debt to experience a breakdown of a marriage or long-term relationship.

Problems with debt also impact a person’s quality of life and have a serious impact on their mental and physical health.

Although the research showed that fewer older people are borrowing on credit cards and unsecured loans than before the financial crisis, the average amount of debt owed has risen by two thirds over the past six years.

The proportion of older people who are classed as having “problem” debt has risen to almost a third of those with borrowings overall.

“Problem debt” is when a specified portion of someone’s income is used up to meet the cost of an unsecured debt or debts.

Baroness Sally Greengross, chief executive of ILC-UK, said: “Without further intervention, problem debt will continue to blight the lives of older people – impacting on their relationships, quality of life and mental health. This is why it is so important that Government makes a commitment to protect funding for debt advice services, and that these services are targeted towards those that need help the most.”

The report’s figures showed that 10% of older people with unsecured debt – around 400,000 – are paying over £85 a week just to service their debt.

The ILC-UK and Age UK are warning that the increased financial pressures older people have faced over the last decade, such as rising prices for energy, are likely to have contributed to the increasing amounts of debt owed among the over 50s.

The figures show that in 2010, self-employed older people were twice as likely as retired people to be in problem debt, with unemployed older people three times as likely.

This is particularly worrying as growing numbers of older people are becoming self-employed, with those 50 plus making up 84% of the increase in self-employed workers since 2008.

Michelle Mitchell, charity director General of Age UK, said: “There is a small group of older people who are facing the nightmare of increasingly serious debt problems which doubles their chance of their marriage breaking down and can ruin their quality of life.

“While it is good news that overall debt among the older population is falling, this research, supported by evidence from other charities, sends a clear warning that funding for debt and money advice for older people must be protected and expanded. Debt advisors need to understand the specific needs of older people often living on low fixed incomes and particular attention must be paid to those moving into self-employment or who have recently become unemployed.”

Vince Smith-Hughes, retirement expert from Prudential, said: “Debt in retirement remains a major issue. Our Class of 2013 research shows that nearly one in five people planning to retire this year will have outstanding debts, averaging £31,200.

“Debt does not have to be a major issue for people in retirement as long as they have sufficient income, and realistic and manageable repayment programmes in place. Paying off debt as early as possible will help to ensure that retirees have more disposable income, in turn enabling them to enjoy a more comfortable retirement.”