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Debt threat for retirement savers

16 March 2018

Two out of five over-55s do not clear credit card balances every month
And one in three have loans and overdrafts on top of credit card debts
Key is campaigning to help savers become retirement ready
Retirement savers are struggling to clear debts as they enter the crucial period in the countdown to stopping full-time work, new research* from leading over-55s financial specialist Key Retirement shows.
Its nationwide study shows nearly two out of five (38%) of working over-55s struggle to clear their credit card balance every month with one in seven (14%) owing money on their plastic for more than a year.
And the research shows a worrying lack of knowledge about how much credit card debts cost them with 43% admitting they don’t know interest rate they pay while more than one in 10 (11%) are paying rates of more than 20%.
It is not just credit card debt that is putting the financial squeeze on with around a third (32%) saying they have other debts including personal loans, car finance and overdrafts hampering their ability to maximise retirement saving.
The debts on top of any outstanding mortgage payments are substantial, Key’s research shows. Around 13% of working over-55s owe £10,000 or more on credit cards and loans with one in 10 making monthly payments of £500-plus.
Key is campaigning to help savers become retirement ready by highlighting the risks of debt for those entering or nearing retirement and also wants to provide support and practical ideas for those already managing debt in retirement encouraging them to look at potential solutions for managing or eradicating debt.

Dean Mirfin, Chief Product Officer at Key Retirement said: “People approaching the end of their working lives need to get their financial house in order as they literally cannot afford to be complacent about the risk of debt when they are retired.
“It is obvious but true that the main cause of debt no matter how old you are is an income that is lower than your outgoings and that is an issue that is easier to tackle while you are working and have a higher income.
“That is why it is important to take action before you retire and seeking independent specialist financial advice can help people ensure they are retirement ready and as debt-free as possible before they stop work.
“There are also practical steps that people who are already retired can take to better manage and control their debts. Burying their heads in the sand is not a solution as the worry which follows can prove life-changing.”
Key’s data shows retired homeowners who have paid off mortgages own property wealth of £1.1 trillion** and earned an average £7,900 last year from their homes.  They cashed in more than £3 billion*** of property wealth last in 2017 as the equity release market expanded at a record rate paying out £8.2 million a day to pensioners.
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
** Key Retirement’s Pensioner Property Equity Index tracks the amount of equity held in property by people over 65 years old in Great Britain. Figures are based on analysis of data from the ONS Family Spending Report (2014), the UK House Price Index, Registers of Scotland House Price Statistics and ICM (2014) and Key Retirement’s UK Equity Release Market Monitor.
** Key Retirement market data for 2017 The Monitor uses Key’s data to reflect the market as a whole. The data reflects both members and non-members of the Equity Release Council, and provides the most detailed analysis of the equity release sector

Page last updated: Tuesday 13 August 2019