One in two over-65s owes money on mortgages, loans, cards and overdrafts, according to Key Retirement Solutions.
The equity release provider says the average pensioner taking out an equity release plan on the value of their home has debts of £35,991. Making repayments on the debts takes an average £297 a month from pensioner income – on the average retired household income of £12,412 a year after tax that equates to nearly 30% of income going on debt repayments.
The research was based on 3,501 customers who released equity from their homes during 2009. The results also show that the over 70s carry a greater level of debt than the over 65s with an average debt of £40,958 compared to £29,314.
Mortgages make up the biggest slice of the debt with 27% of pensioners still owing money on their homes. KRS says this in part is a reflection on the fact that an increasing number of today’s pensioners are living with a mortgage into retirement following an endowment or other investment shortfall. This situation is predicted to worsen as many endowments are due to mature with considerable shortfalls in the coming years.
The average still owed by the over 65s on mortgages is £35,441 rising to £52,576 for the over-70’s while the average credit card debt is £8,881 rising to £9,048 for the over-70s.
Dean Mirfin, KRS group director, said: “Property wealth has enabled the over-65’s in common with the rest of the population to comfortably afford to borrow. Servicing debt cannot continue to be a way of life once you no longer have an income to enable you to comfortably make repayments and clearly many pensioners will struggle to juggle loans
