A third of pensioners still have mortgage debts

A third of pensioners have outstanding mortgage debt, averaging at £43,069 per head, according to research from equity release specialists Key Retirement Solutions. This debt is equivalent to over £140 billion UK-wide.

The report, which looked at the financial situation of 3,826 people aged 65 or over who released equity from their home with Key Retirement Solutions in 2008, also found that over 65s are also living with considerable unsecured debt. According to the research, a fifth of pensioners have outstanding loan payments averaging at £10,871 – equivalent to a total of over £22 billion UK wide.

Further, a fifth have outstanding credit card debts averaging at £8,892, contributing over £18 billion to UK pensioners’ collective debt. Finally, a small minority, just 3%, are dipping into their overdrafts, to an average debt of £5,107, adding over £1 billion to the UK pensioner debt figure.

This brings the total estimated debt among UK pensioners to £183 billion, with an average monthly repayment per head of £308.

According to the report, older retirees tend to be in a worse situation than their comparatively younger counterparts. The average debt for those aged 65-69 was found to be £29,053, but the average for those aged over 70 was calculated to be £35,782. Whilst the levels of debt are concerning the effect on pensioner income is considerable.

Dean Mirfin, Key Retirement Solutions Group Director, said:

“Whilst these figures are based on those who have come to Key Retirement Solutions to release equity from their homes, even if the levels are only partly reflective of the true picture for today’s pensioners, the future is looking gloomy for many who will spend their retirement repaying debt. Many look at retirement as a period when we should be free of any debt worries and enjoying our retirement incomes to the full.”

Chris Tapp, Director of charity Credit Action, comments on Key’s findings:

“Debt and credit has become, in the past decade, a central feature of the way individuals manage their money and, despite what many may think, those over-65 are no exception to this. Unfortunately, as the events of the last year have shown, this trend is unhealthy and in many cases, unsustainable. For those pensioners now burdened with high levels of debt – and this research shows that such people are distressingly numerous – the reality of living with such financial baggage is often a hugely stressful experience, at the very time of life when one would hope such concerns would be a thing of the past. Ensuring pensioners are given the free and independent money advice and help they need really should be a priority in the coming months.”

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