It might surprise you, but a new study has revealed that a huge number of people in retirement are still battling with debt. A staggering one in three pensioners – that’s 3.3 million people – are carrying an average of £17,000 in debt!
This means that retirees across the UK are collectively owing a massive £58 billion, which includes credit card bills, loans, car finance, and even mortgages. These debts are putting a serious strain on their finances, with the average retiree spending £602 a month just to keep up with repayments. That’s £7,226 a year, which is roughly a quarter of the average annual income of retired over-50s.
A Big Problem: Mortgage Debt
The study, conducted by life insurance company SunLife, found that a concerning number of retirees are still saddled with mortgage debt. In fact, 5% of pensioners – that’s half a million people – haven’t paid off their mortgage yet, with an average debt of £63,644 per person.
Credit Cards: The Biggest Debt Headache
But the most common type of debt among retirees isn’t the mortgage – it’s credit card debt. A quarter of retirees (25%) are still paying off their credit cards, owing an average of £3,566 with monthly repayments of £408.
Managing Your Finances in Retirement
So what can retirees do to manage their debts and avoid financial stress? It’s important to take a proactive approach:
- Speak to a financial advisor: A professional can provide personalized advice and help you understand your options, such as equity release or downsizing to a smaller home.
- Consider equity release: This allows homeowners over 55 to access the value of their property by taking a loan that is only repaid when the house is sold after their death. However, it’s crucial to consider the impact on inheritance and the potential for high interest charges.
- Explore alternatives: Downsizing your home can free up cash to tackle debts.
Don’t Forget: Inflation Is Still a Factor
While inflation has slowed down a bit, it’s still a major concern for retirees. The cost of living keeps rising, and that includes the increasing cost of debt.
It’s clear that many people are facing a financial struggle in retirement. Don’t let this be you! Taking action to manage your finances now can make all the difference.