Increasing numbers of pensioners are struggling to pay debts in retirement because they didn’t spend enough on them before retiring and now have a much smaller income to deal with the problem, according to new research.
More than a million older people in debt – around 28% – are said to be in a ‘problem debt’ situation which they are struggling to repay.
The research comes from the International Longevity Centre (ILC) which says that 6% of people aged over 50 also have debt issues and that a quarter of older people are using unsecured credit to get by.
While most people aged over 50 are less likely to be in debt, the figures for those aged 70 with debts show that one in six people are struggling.
Of those, 400,000 pensioners are said to be paying £85 a week to service their debt with creditors.
Marital breakdown
The research also shows, for the first time, how debt affects older people with their being more than twice as likely to suffer a marital breakdown compared to those who are not in debt.
The ILC says that with increasing financial pressures as people prepare for retirement, such as increasing energy prices, are leading to large amounts of debt among those aged over 50.
In addition, there’s also a generational change in that those reaching retirement have been used to using credit cards and accessing other forms of borrowing than older pensioners.
Now a new report, ‘Tales of the Tallyman: Debt and problem debt among older people’ reveals just how widespread this problem is.
The report reveals that people who have been self-employed are twice more likely to be in problem debt than other retirees, and unemployed older people are three times more likely to be in debt.
This is, says ILC, of great concern considering that growing numbers of older people have been forced to become self-employed because of a lack of career opportunities.
Mortgage risk
Indeed, this is underlined by the fact that people aged over 50 now make up 84% of the increase in self-employed workers in the UK since 2000.
There are also problems with people who have not paid off their mortgage which is identified as a key risk factor for people struggling with problem debt.
The research, which covers debt problems since 2002, show that while the numbers of those aged over 50 accessing credit dropped by 10%, the amount of unsecured debt increased from £1,500 to £2,500.
Among those in debt, 10% owed more than £15,000.
Michelle Mitchell, director general of Age UK, said: “While overall debt is falling among the older population, which is good news, there is still a need for debt and money advice that should be expanded and protected.”
