One in three people retiring this year will be in debt, with the average amount owed reaching £17,460, according to a new study by the over-55s specialist adviser, Key.
The research found that of those in debt, 48% still owe money on credit cards, 31% have an outstanding bank loan and 14% will still have a mortgage.
With the State Pension Age due to start moving to 66 for men and women in 2020, Key had conducted research in December among a sample of 1,000 people expecting to finish full-time work this year.
While the average amount owed by those in debt was revealed to be £17,460, Key added that 8% of respondents owe over £20,000, and another 4% of people retiring this year suggested they do not actually know how much they owe.
Key CEO, Will Hale, commented: “Today’s findings suggest that while most people work hard to retire debt-free, this is not the reality for one in three people who need to consider how they can service and repay over £17,000 in borrowing from their retirement nest egg.
“Even those with generous incomes may find this a stretch and people are taking an average of three and a half years to clear the debts they retired with – at a time when they should be enjoying an active retirement and worrying less.”
Key’s research highlighted that one in eight of those in debt expect to owe money for nine years or more – with a third of them saying they will never pay off the money they owe.
The adviser added that 34% of people have only started to make definite plans to retire within twelve months of their intended finish date – which Key suggested was a relatively short period to clear borrowing.
Furthermore, Key highlighted that over-65s have more than £1trn worth of unmortgaged housing equity, and the adviser will be launching a major new marketing campaign to encourage people to get answers to questions they may have around equity release.
Hale added: “Equity release is not right for everyone, but it is vitally important that people are not prevented from considering how their largest asset, their home, can support them in retirement by misconceptions and unanswered questions concerning later life lending options.
“There is a lot of help available online on how to budget for retirement and working with a financial adviser in the run-up to retirement can make a massive difference in being as retirement ready as possible.”
Recent Stories