Recession burden for grandparents

The debt burden for retirees is getting progressively worse, according to the fifth annual UK Pensions Report from Scottish Widows.

The report reveals that almost one in six (15%) retired people in the UK have an outstanding mortgage, with an average debt of £50,100 – an £8,000 increase from 2008.

When it comes to unsecured debt such as credit cards and personal loans, the average debt for retired people is £7,344, up from £6,732 in 2008 and £5,930 in 2007.

This brings the total nationwide debt (including mortgage and non mortgage debt) among retirees up to £90.4 billion, compared with £72.3 billion last year.

Ian Naismith, Head of Pensions Market Development at Scottish Widows, said:

“The situation for retirees in debt is not getting any better, and an increase of eight thousand in the average amount of mortgage debt is alarming. The recession has seemingly done nothing to encourage retirees to cut their debt, and with the possibility of the value of their property dwindling, they could be leaving themselves in a vulnerable position. Those in retirement should be able to enjoy life and not worry about the financial burden of debt, as well as their retirement income.”

But personal debt isn’t the only thing Britain’s retired population have to worry about. The research shows that one in fourteen (7%) have one or more grown-up dependent children. And the situation doesn’t look likely to improve with the next generation. The amount of pre retirees who still have a mortgage remains the same as last year at 43% but the average mortgage debt has gone down slightly from £58,300 to £57,000.

Mr. Naismith continued:

“The situation doesn’t look much better for pre-retirees – at a time when they should be putting all their money aside for retirement they have to concentrate on paying off debt. It is important for these people who will be reaching retirement in the next few years to consider how best to prepare themselves for the eventuality of having to juggle their debts on a reduced income when they stop working.”