One in Five Still Stuck in Debt at Retirement
- 19% of those planning to retire will do so in debt
- Average debts are over £30,000
- Debt levels have increased
Retirement is meant to be the time you relax and stop worrying. You've worked all your life, saved relentlessly, perhaps even bought a house. But now, one in five start retirement still stuck in debt.
Nearly a fifth of those retiring this year will be in debt when they do so, according to research by Prudential.
19% of those who plan on retiring said that they will not be able to clear their debts before retiring in 2018, and 6% believe that they will never clear their debts.
People in the North West are most likely to retire in debt, while those in Wales are least likely, according to the research.
Vince Smith-Hughes, a retirement incomes expert at Prudential, said, “It is worrying to see a rapid increase of a pensioners average debt.
“It’s possible that some people feel more comfortable about servicing debt, and are borrowing more.
“Meanwhile more and more grandparents are helping their grandkids with university fees, and children with house deposits.”
Two thirds of those who are retiring this year are also expected to miss out on benefits they’re owed, due to being poorly informed on what they’re owed.
Tom Church, co-founder of Latest Deals said, "Debt is crushing pension pots. The Government needs to wake up to the time bomb. Many can't even save for a house, yet alone a pension, of which servicing debt will take a massive chunk. This is a big problem and there needs to be a new approach - perhaps even clearing the debt to avoid future problems, such as illness from not being able to afford heating and general healthcare."
On average, those retiring in debt are expecting to clear them in the next three and a half years, although 14% think it will take more than seven years, and 6% think they will never be out of debt.
The average levels of debt have also increased, in 2017 is was £24,300, and this year it is £33,900, the highest level since 2012.