Debt squeeze 'spoiling retirement for one in five'
21 March 2018
Credit card and loan debt is preventing more than one in five over-65s from enjoying retirement as they struggle to maintain their standard of living with one in seven (14%) relying on credit cards to boost their income in retirement, new research* from leading over-55s financial specialist Key Retirement shows.
The research found 26% of over-70s are juggling three or more credit cards and one in 10 have had a balance they’ve not cleared for more than a year.
The worry of debt in retirement is only going to get worse, with levels of both secured and unsecured debt held by over-65s on the rise. Since 2016 it has increased from £70bn to an estimated £85bn in 2018**. Secured debt such as mortgages accounts for £73bn and nearly 40% of 65-74 year olds with an interest only mortgage will struggle when the capital repayment is due**.
Debt in retirement is not caused by over-spending however. A combination of inadequate saving, the launch of pension freedoms and unexpected bills have meant pensioners need to rely on borrowing in retirement. More than half (55%) of those surveyed say they had to pay unexpected bills on credit cards with car repairs the biggest issue followed by emergency house repairs.
Key is campaigning with independent financial expert Alvin Hall to highlight the issue and has launched a guide Managing Debt In Retirement outlining how to be more debt savvy both before and during retirement.
Alvin Hall, independent financial expert, said: “A comfortable stress-free retirement is what we all want but debt is increasingly a silent source of worry for too many retirees.
“There’s a saying from my childhood I tell those who feel trapped by debt: We can’t change the past but we can change our future. Breaking through what’s created worry and understanding the problem is the only way to move forward.”
Dean Mirfin, Chief Product Officer at Key Retirement said: “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.”
Key’s guide aims to help people become retirement ready with clear advice on options for managing and eradicating debt. It also considers some of the pros and cons of boosting income by carrying on working as well as downsizing and releasing property wealth for homeowners.
Key’s independent guide Managing Debt In Retirement is available by calling 0808 2080958 or visiting: https://www.debtinretirement.co.uk
Notes to Editors
* Research conducted by independent researchers Consumer Intelligence among a sample of 3,000 adults aged 55-plus split among three groups, those aged 55 to 65 still in work: retired people aged 65 to 70; and retired people aged 70-plus
**Research conducted by CEBR ‘Debt in Old Age 2018’ - drawing on the Wealth and Asset survey from the Office of National Statistics and primary research survey of more than 2000 over 55s