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 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, the firm said. 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.
Key Retirement chief product officer Dean Mirfin 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.”
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