New research has found that 33% of women aged over 54 who have taken on or held debt in the last five years have done so to cover day-to-day expenses. This is compared to 26% of men.
The research from equity release lender more2life and economics consultancy Cebr, also found that men (30%) were more likely to get into debt to finance a large purchase such as a vehicle when compared to women (23%) and use debt to repay other borrowing (24% vs. 22%). Women (31%) were also more likely to need to make mortgage repayments than their male counterparts (26%). More2life says this seems to suggest that women are more cautious in their approach to borrowing, focusing on the necessities rather than big ticket items.
For both men and women, the most common form of borrowing was against a credit card, with 21% of respondents saying they had used this form of unsecured borrowing in the last five years. However, men were twice as likely to use a 0% credit card to help manage their finances, with 20% of men saying they had used this form of borrowing compared to just 10% of women.
Looking ahead, 30% of women aged 54 and over said they expect the Covid-19 crisis to cause an increase in the amount of debt they have over the next six months, with 13% believing the crisis would lead to a large increase in their debt levels. This was more than double the number of men (6%) who believed Covid-19 would cause a large increase in their debt levels.
More2life said this could be a result of many older women seeing the value of their pension pots fall or losing their jobs as a result of the economic impact of the crisis. Indeed, figures from the Office for National Statistics (ONS) reveal that employment for women aged 65 and over had fallen by 79,000 between May and July this year – a record decrease for this demographic. As a result, some older women could be living on a much lower income after the crisis and may be more likely to borrow in the future to make ends meet.
Dave Harris, CEO at more2life, said: “While unsecured borrowing is how many people manage their day-to-day finances, it is particularly worrying to see that older women are borrowing to make ends meet. With the gender pensions gap a pressing issue, this suggests that those in and approaching retirement are struggling financially which does not bode well for the future.
“Indeed, the Covid-19 crisis is sure to accelerate this issue as it takes a toll on people’s job security and retirement income. It is vital that the financial services industry engages with older generations, particularly women, to ensure that this demographic is properly supported in the months and years to come and that more retirees can live with financial stability.”
The research also revealed that nearly two in five (38%) retirees aged 54 and over say their monthly expenditure exceeds their household’s income, either on an occasional or regular basis. Looking at this more closely, a third (33%) of women say this is the case in their household.
When considering the over-54s as a whole, a significant majority (72%) dip into their cash savings to cover necessary costs when their expenditure exceeds their income. 16% of this cohort have also used their bank overdraft to bridge the gap between income and expenditure.
Harris added: “Today’s findings highlight the lack of knowledge among older Britons on the range of financial options available to them which can further support them in later life, with many resorting to their cash savings or unsecured borrowing to make ends meet. The later life lending industry has an obligation to raise awareness of the full range of solutions available to support retirees who are facing financial hardship. This will ensure that those in later life are aware of all of their options to boost and manage their retirement income, particularly in the current climate.
“Utilising their housing wealth, for example, could be one such solution. By working with an adviser to form a holistic financial plan which incorporates a variety of assets, such as property, retirees can enjoy a more secure retirement.”